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Shareholder activists, watch that credit rating!

Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters. You can share your thoughts with Thyagaraju Adinarayan (thyagaraju.adinarayan@thomsonreuters.com), Joice Alves (joice.alves@thomsonreuters.com) and Julien Ponthus (julien.ponthus@thomsonreuters.com) in London.

SHAREHOLDER ACTIVISTS, WATCH THAT CREDIT RATING! (1449 GMT)

Shareholder campaigns against the strategy or the management of a company can often lead to a credit rating downgrade, an S&P global research note found.

“We found that the credit impact of the activism was largely unfavorable, albeit only moderately so, with most related downgrades being of one notch”, the rating agency wrote.

“Assuming the trend in 2015-2019 continues, a company subject to shareholder activism has a one-in-nine chance of seeing a rating action, with that action twice as likely to be negative as positive”, it found.

One other interesting finding is how shareholder activism has surged in Europe since 2015.

See below:

(Graphic: sdvf, https://fingfx.thomsonreuters.com/gfx/mkt/13/3937/3893/Pasted%20Image.jpg)

(Julien Ponthus)

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GONE IS THE REBOUND! EUROPE FALLS BACK IN THE RED (1115 GMT)

European stocks were on a rising trend for about 90 minutes, and then gradually fell from their peak.

Shortly before 1100 GMT, most indexes and trading centers were in the red – a very different situation from the upbeat mood this morning.

But by 1108 GMT most benchmarks are back in the black, as volatility plays with investors’ nerves.

It’s currently hard to pinpoint a news headline or a precise trigger for the initial, quite gradual, reversal. There’s grim news from Spain on the coronavirus front with a surge in deaths and new infections.

Mikael Jacoby, head of continental European equity sales trading at Oddo, just told us he believes the rebound was too early and not justified by fundamentals.

Technical levels were also crossed, he noted, such as 4450 points on the CAC 40.

“Most rebounds encourage clients to sell,” he added.

Have a look at today’s session so far:

(Graphic: wxc, https://fingfx.thomsonreuters.com/gfx/mkt/13/3926/3882/Pasted%20Image.jpg)

(Julien Ponthus)

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ONLY 2.5% OF STOXX IN PLUS OVER LAST MONTH (1020 GMT)

A quick staggering stat grabbing our eyeballs this morning: Only 15 stocks out of the 600 are in the black in the month to today. And these stocks are a mix of online grocers, Internet companies and healthcare-related names.

Ocado <OCDO.L>, HelloFresh <HFGG.DE> and Colruyt <COLR.BR> are among the winners. The top fallers are mostly energy stocks and airlines.

(Thyagaraju Adinarayan)

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OPENING SNAPSHOT: $2TN PACKAGE CHEERS INVESTORS (0840 GMT)

European stocks jump again with the main bourses on track for a second straight day of gains after U.S. officials agreed on a whopping $2 trillion coronavirus package.

The pan-European STOXX 600 index <.STOXX> is rising nearly 4% fueled by a spike in travel and leisure <.SXTP> stocks.

Top gainers this morning are Dufry <DUFN.S>, which did quite well yesterday too, and Thyssenkrupp <TKAG.DE>, up 18% after it said it is planning job cuts.

Rentokil <RTO.L> shares slumped as much as 19% earlier today, on track for worst day since 2008 after the company suspended dividend and scrapped its outlook.

No big surprises on the UK inflation front, which slowed in February in line with forecast as fuel prices dropped

The U.S. Senate is expected to vote on the stimulus package later in the day and the House of Representatives soon after.

(Joice Alves)

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ON OUR RADAR: FUTURES RISE ON STIMULUS; COMPANIES CUT DIVIDENDS (0753 GMT)

Futures are rising 3% to 4% suggesting European bourses will open in positive territory, again, as investors at this point are getting some comfort from the massive stimulus package from the U.S.

That’s on top of measures announced across Europe: in the UK, the government offered millions of companies a three-month extension for filing accounts due to coronavirus.

Pain at single companies remain with Thyssenkrupp saying it is planning to cut 3,000 jobs at steel unit by 2026. Dividend cuts keep coming as well with Lagardere <LAGA.PA> suspending its market guidance and saying it plans to slash dividends.

One of the worst hit sectors, airlines, are begging for rescue packages as coronavirus damage soars to $250 billion.

Oil no exception either with Equinor slashing investment and spending as part of a $3 bln coronavirus package.

Health care space continues to be on the radar for positive news as Novacyt <ALNOV.PA> and Yourgene Health <YGEN.L> said on Wednesday that they will team up to produce coronavirus testing products in the UK.

(Joice Alves)

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EVERYTHING CAN CHANGE, AGAIN (0640)

Futures are pointing for an open in the black with the main indices up around 1% as U.S. senators and Trump reached an agreement on a 2 trillion stimulus package to alleviate the economic impact of the coronavirus outbreak.

The FTSE 100 <FTSE> recorded its best day since the huge swings of the 2008 financial crash yesterday as massive global stimulus efforts calmed investors.

But spreadbetters are cautions suggesting by 8 am investors focus could shift to European news: The number of coronavirus deaths in the UK jumped yesterday, the first day of the national lockdown. Numbers of deaths were up also in Italy.

At 7 am, key UK inflation data will be released.

Financial spreadbetters at IG expect London’s FTSE to open 71 points lower at 5,375, Frankfurt’s DAX to open 122 points lower at 9,579 and Paris’ CAC to open 65 points lower at 4,178.

(Joice Alves)

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(Reporting by Danilo Masoni, Joice Alves, Julien Ponthus and Thyagaraju Adinarayan)

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