* Optimism on Brexit and the trade war drive stocks higher
* STOXX up 1.7%, Irish stocks jump 3.7% outperforming rest of Europe
* Publicis sinks after results, drags WPP down
* Hugo Boss shares slump 11%, pulling down Burberry Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Julien Ponthus. Reach him on Messenger to share your thoughts on market moves: email@example.com
DIVERGING FORTUNES IN LUXURY (1256 GMT)
Hugo Boss BOSSn.DE shares dropped more than 13% today hitting their lowest since December 2010 after the company's latest sales warning. Just yesterday, rival company LVMH LVMH.PA shares rallied on the luxury giant's better-than-expected sales.
The two companies highlight the polarisation in the luxury space, with some companies investing heavily on marketing and product design, while others, which lack the same firepower, struggling to compete, says Aneta Wynimko, a portfolio manager at Fidelity International, who leads a $1.3bn global equities consumer fund.
Fidelity owns shares in both companies, according to the latest Refinitv data.
"Today you have to prove to the consumers everyday that you are worth the money they are paying," she says.
The German company is also suffering from structural changes in the fashion market, as shoppers seek more casual clothes, a late start to an online sales push and weak sales trend in the Americas due to few tourists from Asia and the stronger dollar, says Volker Bosse, analyst at Baader Bank.
Some brands just don't have LVMH's distribution capacity, comprising more than 4,500 shops across the world. The fact that large wholesalers sell luxury products at a discount in outlets can hit consumers' willingness to pay full price for brands, Wynimko says.
"Consumers try to get a bargain whenever they can," she says.
The chart below shows the diverging fortunes of LVMH and Hugo Boss shares:
MILESTONES GALORE AS JOHNSON'S BREXIT BUS APPEARS ON COURSE (1244 GMT)
Banks, retailers, housebuilders... oh wait it's easy this way, 85% of the constituents in the FTSE midcap index .FTMC are rallying! And in the rest of Europe, DAX .GDAXI is indeed having its Oktoberfest rising 2%.
And we're not short of milestones, here are your stats of the day:
** The JPM UK domestic plays index .JPDEUKDM is having its best run since it was created in Jan 2017, +7.3%. To put that into context, the second-best single day gain was just 2.3% in mid-September.
** Shiny sterling is heading for its best two-day gain since mid-2016 - in fact the gains were largely in the last 24 hours.
** The FTSE 250 index .FTMC is poised for its best single-day gain in more than 3 years.
** The Irish stocks are having a party, rallying 4%.
The not-so-sexy ones (these would've been the top stats on a normal day):
** The FTSE 100 .FTSE index is the worst performer across Europe, rising JUST 0.8% -- isn't that a small move?
** The big-fat German growth stock SAP SAPG.DE is rising 7.8% after another blow-out quarter, but it's not even among the top 20 risers.
LONG THE TAX CUTS, SHORT THE MONETARY FUDGE (0935 GMT)
When it comes to stock markets, there's really nothing like a massive corporate tax cut to prop things up, writes Kevin Muir in this week's MacroTourist newsletter.
Granted, if one compares European equities muddled in an environment of negative rates with their U.S. peers, turbocharged by Trump's fiscal stimulus, the last two years seem to unequivocally validate his point.
Tax cuts are however no longer on the U.S. agenda and investors will be served Fed cuts instead. In Europe, the ECB seems entangled in an apparent endless lower-for-longer monetary cul-de-sac while a German fiscal stimulus remains an investor fantasy for now.
Taking the view that "the world is starved for fiscal stimulus", Muir noted with great interest Indian shares on Sept 20 notching their best day in more an a decade after the government announced deep cuts in corporate taxes to revive flagging growth. lesson learned from that is quite straightforward Muir believes.
"Buy countries willing to engage in fiscal stimulus, sell those relying on monetary stimulus".
In practice, he advocates a pretty contrarian and arguably very risky trade: "I think buying India and shorting either the US or the entire MSCI world index is a great risk reward trade".
OPENING SNAPSHOT: STOCKS RALLY DESPITE HUGO BOSS, PUBLICIS SHAMBLES (0827 GMT)
It's as expected a positive start for European stocks but a few stocks are somewhat spoiling the party such as Hugo Boss BOSSn.DE which is in free fall, down about 11%, its worst performance since Feb 2016 and hitting its lowest since 2010.
Among losers, Euronext is also facing heavy blows, down 4%, after unveiling a new set of financial targets.
Elsewhere there's no shortage of love for SAP SAPG.DE as the stock is rising 7.5% on a good set of results and lifting the European tech sector (+2.5%).
The only big index in red is the FTSE, and that's due to the pound getting a boost from new found optimism on a possible Brexit deal.
That meanwhile is boosting the Irish stocks .ISEQ , which is outperforming rest of Europe.
ON THE RADAR: BIG MOVES FOR PUBLICIS AND HUGO BOSS (0648 GMT)
Optimism on both the trade war and the Brexit fronts is seen lifting European stock markets this morning. Futures are currently trading in the green at the exception of the FTSE which is being dragged down by the rising pound.
There's also plenty of corporate news likely to trigger sharp moves at the open such as for France's Publicis PUBP.PA , which had to cut its full-year sales target for a second time and has seen its rating cut by SocGen. There's a likely read-across for WPP WPP.L which is also expected to suffer.
After yesterday's stellar results for luxury, there could be hard landing to investors with Hugo Boss BOSSn.DE cutting its 2019 earnings forecast, citing weak demand notably in Hong Kong, a growing concern for the industry.
Germany's SAP SAPG.DE is on the rise after it published a strong set of third-quarter results lifted by a major cloud-computing deal with its CEO standing down.
In the financial industry, Jupiter JUP.L reported net ouflows of 1.3 billion pounds ($1.6 billion) in the third quarter while Man Group 's EMG.L assets under management fell 1.5%. the nordics, Equinor EQNR.OL said it would $549 million to build floating turbines to supply power to several North Sea oil and gas platforms.
In what could be seen as a vote of confidence for London's financial centre, EG Group is reported considering an IPO which could value the company at over $12.44 billion.
The Renault/Nissan corporate saga is continuing to unfold with Renault's RENA.PA Thierry Bollore, denouncing a "coup" against him.
Here are a few headlines:
SAP's McDermott steps down after decade as chief salesman and dealmaker Boss cuts outlook again, citing weak U.S., Hong Kong business Group weighs IPO that could value co at over $12.44 bln- Bloomberg launches 5G smartphone plans for consumers and businesses top shareholder says never called for special dividend board to meet, as CEO denounces potential exit as 'coup' sets new financial targets, ready for more M&A deals Ferretti IPO postponed to Oct. 15 due to weak demand Group expects to exceed profit view on Thomas Cook (NS: THOM ) liquidation Billionaire Leonardo Del Vecchio Plans To Lift His Stake In Mediobanca Above 10%- FT CEO under pressure following second sales target cut Ponthus and Joice Alves)
RISK APPETITE FOR BREAKFAST (0531 GMT)
There clearly are positives vibes making their way from Asia and the U.S. this morning when it comes to the U.S./trade war and that should be enough to lift European bourses at the open.
Trump's willingness to meet China's top trade negotiator is fuelling optimism that progress can be achieved on an issue which has been a constant burden for investors for close to two years now.
IG financial spreadbetters expect Frankfurt's DAX to open 35 points higher and Paris' CAC to rise 14 points, adding on yesterday's gains.
While new found optimism on Brexit is participating to the risk-on build-up, the rise in the pound is however weighing on British blue chips which often have heavy exposures to the dollar.
London's FTSE is seen opening 24 points lower.
($1 = 0.8028 pounds)
https://tmsnrt.rs/2MBdvVn Hugo Boss shares vs luxury goods
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