STOXX LIVE MARKETS Rising, Banks and Energy Hit New Level

February 8 – Welcome home to real-time market coverage from Reuters reporters. You can share your thoughts with us at [email protected]

STOXX UP, BANKS AND ENERGY BEAK NEW GROUND (0846 GMT)

European equities got off to a positive start as it appears investors have put aside concerns about a more rapid ECB policy tightening to focus on sectors that stand to benefit the most from an economic recovery and earnings In progress.

Join now for FREE unlimited access to Reuters.com

Register

It’s no wonder, then, that banks and energy are innovating, increasing first trades to their highest levels since August 2018 and January 2020 respectively, while miners are seeing strong demand, up more than 2%.

Tech is lagging the uptrend following losses on the tech-heavy Nasdaq and rising rates putting pressure on expensive valuations. Stay-at-home names are also generally weaker with Ocado down 9% after the online supermarket warned it would miss core 2022 earnings estimates due to more investment.

The well-received results lift ams of oil major BP and sensor maker, but French bank BNP is lagging a positive banking sector as a lack of costs offset strong 2025 targets.

The STOXX 600 equity benchmark index was up 0.7%.

instantaneous

(Danilo Masoni)

*****

LOOKING FOR THIS ‘BCE PUT’ (0801 GMT)

“Progressive”, “data dependent” – these were the words ECB President Christine Lagarde used to soften the hawkishness of her message last week. But after three days of violent price revisions in euro debt markets, there is likely more to come.

Borrowing costs for Europe’s southern flank have risen sharply, with investors now demanding a 160 basis point yield premium to hold Italian 10-year bonds over safer German equivalents. This is 30 basis points higher than before the ECB meeting last Thursday.

European corporate debt could also undergo a correction; Citi estimates that investment grade credit spreads could widen to 90 basis points from 70 basis points at the end of 2021.

Recent moves increase the risk of fragmentation along national lines of debt markets and the derailment of southern Europe’s economic recovery, especially given rising spending shortfalls post-COVID. The question now is: how far can the sale go before decision makers reassure? In other words, the ECB “puts”, in the sense of the safety net that the US Fed is generally considered to provide to stock markets?

The answer? He might still have some time to run. Yields, although rising, are low in absolute terms and Europe still has the safety net of the EU recovery fund. Lagarde promised that “the ECB will ‘obviously react’ if sovereign spreads widen significantly. But as yields resume their ascent on Tuesday, analysts at JPMorgan note that ‘the market may be willing to test that commitment.’

Elsewhere, Softbank’s deal to sell chip designer Arm in a $60 billion deal has collapsed amid regulatory hurdles. It comes days after a $5 billion purchase by Taiwan’s GlobalWafers (6488.TWO) of Germany’s Siltronic was scuppered by Berlin.

Italy

Key developments that should further guide markets on Tuesday:

– UK consumers slowed the pace of spending last month Read more

– France’s BNP beats fourth-quarter profit estimates, BP posts highest profit in eight years in 2021 Read more

– New York Fed Releases Fourth Quarter Household Debt and Credit Report

-American trade balance

– Auction of US 3-year bonds

– US profits: Coty, DuPont, Harley Davidson, Thomson Reuters, Pfizer, S&P Global, Omnicom, Chipotle, Lyft, Peloton

-European results: Qiagen, Banco BPM, Evolution Gaming, BP, Ocado, BNP Paribas, TUI

– Central banks of emerging markets: Poland. Moldova

(Sujata Rao)

*****

EUROPE: IN SEARCH OF DIRECTION (0742 GMT)

European stocks are set to open with no clear direction following late losses on Wall Street, where Facebook owner Meta added to last week’s record slump, and after jitters over rate hikes in the euro zone caused a liquidation of the Italian debt.

Futures on the Euro STOXX 50 index were flat and contracts on the FTSE 100, which is focused on commodity stocks, added 0.2%, supported by positive earnings updates.

BP posted its highest profit in eight years, holiday company TUI was optimistic about its outlook, saying summer travel bookings were steadily approaching pre-COVID levels, while AMS exceeded revenue and margin estimates.

In Asia, stocks reversed early gains as investors fretted over the prospect of the US government adding 33 more Chinese entities to its export control list. Meanwhile, US equity index futures were little changed. Read more

(Danilo Masoni)

*****

Join now for FREE unlimited access to Reuters.com

Register

Our standards: The Thomson Reuters Trust Principles.

Comments are closed.