Europe midday: Stocks mixed as investors mull outlook for company profits, margins
Stocks are trading on a slightly mixed note, with a stronger-than-expected reading on a key survey of German business sentiment failing to completely reassure worried investors and with analysts continuing to air conflicting views on the outlook for financial markets.
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"The extremely mature US expansion is on life-support from the fiscal boost (which surely will run out), valuations across equities and credits are very stretched – and the forward earnings estimates have been coming down quite rapidly.
"Our Cross Asset Strategist, Elia Lattuga, has written extensively on the need to use the rally these past couple of months to turn much more defensive," said UniCredit Research chief economist, Erik Nielsen.
On a more positive note, at the start of the week JP Morgan's Mislav Matejka was telling clients: "we do not think that the weakness [in global equities] needs to last long, or be very material, as positioning is still light. We advise to use it as an opportunity to add further, as we expect the rebound to gain fundamental traction in 2H."
Matejka also said he disagreed with the consensus view that "margins can only go lower as cycle is old and input costs are rising."
As of 1211 GMT, the benchmark Stoxx 600 was down by 0.44% to 374.39, alongside a dip of 0.08% to 11,357.06 for the German Dax, while France's Cac-40 was again moving lower, trading down by 0.13% to 5,263.80.
Shares on the Continent had begun the session with moderate losses, tracking the downdraft seen last Friday on Wall Street and overnight during Asian trading hours.
Helping to buoy sentiment, the German IFO institute's closely-followed business confidence index rose from a level of 98.7 for February to 99.6 in March (consensus: 98.7).
However, Andrew Kenningham at Capital Economics noted how a sub-index linked to the sector in fact retreated, possibly pointing to a worsening recession in German manufacturing.
"This does not change our view that Germany is likely to continue flirting with recession for 2019 as a whole. We recently revised down our forecast for GDP growth this year to only 0.8%," he said.
In the background meanwhile, in remarks made overnight in Hong Kong, US Federal Reserve bank of Chicago boss, Charles Evans, told an audience that downside risks to the economy were greater than those to the upside and that interest rate cuts might be needed. Former Fed chair, Janet Yellen, reportedly echoed his assessment.
US-China trade talks were also in focus, on the back of a report in the Financial Times that Beijing was "refusing to budge" on Washington's demands for it to relax curbs on digital trade.
For later in the day, Belgium's central bank was set to publish its own business confidence survey, at 1400 GMT. Stateside, Boston Fed chief Eric Rosengren was scheduled to deliver a speech in Boston, at 2030 GMT.
To take note of, there was also considerable interest in the scheduled launch, on Monday night, of Apple's video streaming service.
According to Spanish financial website Bolsamania.com, which cited several people familiar with the matter, Bankia and Banco Sabadell held talks - denied by both lenders - throughout 2018 aimed at a possible tie-up.
But plans for a merger were finally shelved following price drops in the shares of both lenders and due to the impossibility of first arranging a divestment by the state in order to avoid it holding too large a stake in the new firm.
French luxury goods group, LVMH, was a big mover early on, with its shares plummeting by roughly 9% amid reports of a so-called 'fat finger' trade.
Stock in Bayer was also moving sharply lower, even after its boss was quoted at the weekend saying that management retained the supervisory board's backing despite the recent second ruling against the company for the Roundup herbicide it inherited from US group Monsanto.
Shares of Peugeot were lower after the Wall Street Journal reported that rival Fiat Chrysler had rejected approaches from the French carmaker earlier in 2019.