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Europe Markets: JPMorgan puts these two European energy giants on ‘catalyst watch’ ahead of earnings

Analysts at JPMorgan Cazenove put Royal Dutch Shell and Eni on their “catalyst watch,” their short-term conviction indicator, ahead of both oil group’s earnings at the end of the month.

Shell’s
RDSB,
+1.35%

RDS.B,
+1.61%

third-quarter update is “positively skewed,” with the broker expecting $14 billion in cash flow from operations excluding working capital, and adding Shell’s LNG trading adds further upside risk. JPMorgan also is expecting a 2022 buyback of $9.2 billion, which is ahead of estimates of $7.8 billion, and an improving fourth-quarter operational outlook.

JPMorgan also expects Eni’s
ENI,
+0.44%

earnings to beat expectations, by about 9%, due to increased production as well as a lower tax rate. Last week’s announcement that Eni is set to list a minority stake in its retail and renewable business in 2022 will further support the stock, as well as the possibility of more buybacks and dividends, the analysts said.

The analysts also suggest long positions on BP
BP,
+1.77%

and Repsol
REP,
-0.88%

but are sellers of strength in Equinor
EQNR,
+0.27%
,
as rate of change on the EU gas trade peaks out.

The oil sector
SXEP,
+0.86%

was one of the strongest in Europe outside of basic resources, but technology shares
SX8P,
-1.13%

slumped on concerns over rising bond yields.

The Stoxx Europe 600
SXXP,
-0.29%

fell 0.4% to 455.39.

Of the major regional indexes, the German DAX
DAX,
-0.36%

declined 0.5%, the French CAC 40
PX1,
-0.16%

declined 0.3% while the U.K. FTSE 100
UKX,
+0.39%

increased 0.3%.

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