LIVE MARKETS-Europe's auto sector remains bleak, but is it priced in?

Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com

EUROPE'S AUTO SECTOR REMAINS BLEAK, BUT IS IT PRICED IN?

The key challenges facing Europe's autos sector are well known. Chinese competition is fierce, Chinese demand is soft, U.S. trade policy is restrictive and Europe's emissions plans are unhelpful.

There had been some hope that the EU's reversal of some emissions regulations could help the ailing sector, but Citi believes that the CO2 emission rule negotiations from December "reiterates the lack of EU policy pragmatism" rather than their "hoped-for, more-industry-friendly outcome".

"This means the competitive policy disadvantage for EU auto OEM continues," writes Citi analyst Harald C Hendrikse.

With the negatives well known, Hendrikse believes it's difficult to come up with positive drivers for earnings and/or investment ideas.

On the other hand, Hendrikse isn't turning even more negative.

"When everything looks this bleak: (1) the negatives are well known and hence largely priced in; (2) OEM earnings have already fallen ~70% from the FY23 peak; and (3) from a low base, FY26E earnings should be less volatile," Hendrikse says.

Within the sector, Hendrikse maintains his 'buy' focus on Porsche and Volkswagen VOWG.DE, as well as the tyre companies.

(Samuel Indyk)

EARLIER ON LIVE MARKETS:

ANOTHER MIXED START CLICK HERE

EUROPE BEFORE THE BELL: FUTURES MOSTLY HIGHER CLICK HERE

THE SPOILS OF OIL CLICK HERE