* European shares up 0.3%, DAX up 0.9%
* German SPD seeks allies to form government
* Crude rally lifts oil stocks, tech underperforms
Sept 27 - Welcome to the home for real-time coverage of
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NO WORRIES ABOUT EVERGRANDE? YES BUT… (0858 GMT)
Markets seem to price in Evergrande as a fully controllable
outcome that won’t spill over from China’s borders.
And here are some numbers by UniCredit Group Chief Economist
Erik Nielsen, supporting this view as he thinks China’s troubled
property developer won’t be "another Lehman".
Chinese corporate bonds account for just around 8% of the
total outstanding of a significant benchmark such as the JP
Morgan CEMBI diversified index (which tracks the performance of
U.S. dollar-denominated bonds issued by emerging market
corporate entities).
On equities, Chinese companies account for about a third of
the MSCI emerging market index. However, the index is skewed
towards tech and financials, while real estate is negligible.
Within the MSCI China, real estate weighs less than 5%,
while financials account for nearly 15%.
But, negative newsflow is likely to accelerate outflows from
China’s equities, “potentially leading to more indiscriminate
shedding of positions,” Nielsen says in a research note.
“The risk to Chinese growth is substantial even if there’ll
be a big-scale policy response. And weaker Chinese growth will
have a substantial impact on global trade and growth – and on
commodity prices,” Nielsen adds.
(Stefano Rebaudo)
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DAX LEADS EUROPE'S REBOUND (0807 GMT)
European shares are off to a positive start this morning
with the STOXX 600 rebounding from losses on Friday,
helped by a reassuring outcome of the German election.
The pan European benhmark was up 0.4% with Germany's DAX
leading the way, up 0.9% in early morning trade.
"Overall, the result is rather slightly positive for the
economy and markets," says Roger Peeters, Managing Partner at
pfp Advisory in Frankfurt.
"The danger of a government including the 'Left Party' was
averted, the extremes on the left and right clearly lost votes.
Probably now SPD/Greens/FDP or CDU/Greens/FDP, both
constellations the stock market can cope with," he adds.
Here's your opening snapshot:
(Danilo Masoni)
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TEUTONIC SHIFTS (0659 GMT)
The main takeaway from Sunday's German election is that
coalition talks to form the first post-Merkel administration
could take weeks, if not months to conclude.
The Social Democrats (SPD) and the conservatives both are
seeking to lead a new government but at the moment, a so-called
"traffic light" coalition between the SPD, Greens, and the
liberal FDP seems most likely.
In truth, the policy outcomes from either coalition options
are not vastly different. But if SPD leader Scholz manages to
capitalize on his narrow victory, then by Christmas, we may see
an administration which endorses a shift towards greater
European Union integration and a looser fiscal policy in
Europe's biggest economy.
That prospect may dent Bunds, while lifting equities at a
time when the ECB is looking to roll back its emergency
stimulus. However German bond yields edged down from 2-1/2-month
highs, it looked unlikely a leftist coalition would take power.
So equity futures point to a strong start in Europe and on
Wall Street; markets are also cheering an easing in Sino-U.S.
tensions following a deal to end a U.S. fraud case against the
daughter of Huawei's founder.
Problems continue at Chinese property developer Evergrande;
Hong Kong-listed shares in its electric car unit fell 23% after
a warning it swiftly needs a cash injection. However, global
sentiment was barely dented, suggesting concerns over the
developer's collapse are starting to ebb.
Finally, a surge in oil prices to three-year highs was
another reminder of risks associated to mounting inflation
pressures, while panic fuel buying saw nearly a third of BP's
petrol stations in the UK running on empty.
Key developments that should provide more direction to
markets on Monday:
* German SPD seeks allies to replace Merkel-led coalition
* HSBC shares jump in Hong Kong as release of Huawei exec
seen easing tensions
* BP says nearly a third of its UK fuel stations running on
empty
* Private equity firm EQT bids $3.94 bln for Germany's
Zooplus
* Federal Reserve speakers: Chicago Fed President Charles
Evans speaks
* Bank of England Governor Andrew Bailey speaks
* Bank of Japan releases Minutes of Monetary Policy Meeting
* Emerging markets: Ghana cbank announcement
* U.S. durable goods orders
* Treasury auction: 2-year and 5-year notes
(Danilo Masoni)
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EUROPE HEADS NORTH (0621 GMT)
European shares looks set to kick off the week on a positive
footing as investors ponder the results of the vote in Germany
and following a positive session in Asia overnight.
Futures on Europe's main equity benchmarks were up around 1%
at the time of writing following heavy losses on Friday due to
concerns about Chinese property developer Evergrande.
Germany's Social Democrats were set on Monday to start the
process of trying to form a government after they narrowly won
their first national election since 2005.
(Danilo Masoni)
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