Last checked at 
* European shares up 0.3%
* Asian bourses close higher
* Wall Street futures up
* Oil prices cool down
Sept 30 - 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
BANKS: STOP WORRYING ABOUT PAY-OUT LIMITS (1136 GMT)
The ECB and the BoE no longer have a ban on dividends and
despite an overall strong performance in euro zone stress tests
this summer, there's still a perception that there's informal
limit as to how much banks can pay out to their shareholders.
But, according to Berenberg analysts, Nordea’s
current buyback plan should support the view that pay-out caps
of any kind or form are no longer in place.
“Many believe that the European Central Bank (ECB) has a
pay-out cap at 100% of earnings,” they say.
“Nordea’s recently announced EUR2bn buyback implies an FY21
pay-out materially above this level, at c120%,” they add.
“This should help allay market fears that well-capitalised
banks will perpetually be forced to hoard capital.”
Berenberg analysts suggest being selective following bank
stocks strong performance and the narrow valuation gap to
historical levels.
Their preference remains for well capitalised lenders, such
as Nordea, ING, NatWest, UBS,
Barclays and Unicredit.
(Stefano Rebaudo)
*****
M&A IN PARIS (1045 GMT)
There's been quite a lot of M&A-triggered market price
action this morning in Paris but it's been a bit of a
roller-coaster as there were no hard deals to back the moves.
Carrefour shares made a big jump around 1100 local time when
French daily Le Monde reported that talks had taken place with
the family behind the rival Auchan chain of stores.
Speculation surrounding the supermarket group has been
ongoing since Canada's Alimentation Couche-Tard dropped a 16.2
billion euro bid, courtesy of an unwelcoming French government.
This latest rumour doesn't seem to stick though with
Carrefour stock now... down 1.22% as you can see below:
Another big move was Eutelsat surging well over 10% to highs
unseen since March 2020 after the satellite company announced it
rejected a bid proposal from billionaire Patrick Drahi.
The thrust of the share boost seems to have fizzled out
somewhat:
Then again, in the grand scheme of things, it's not really a
game changer for Eutelsat shareholders who have known better
days:
(Julien Ponthus)
*****
FANCY MORE BULLISH VIEWS ON VALUE? (0948 GMT)
Well here you go! This one just came in today.
"We are bullish 'Cyclical Value' stocks given a backdrop of
rising bond yields, strong nominal growth in 2022 and extreme
valuation dispersion," say Morgan Stanley strategists led by
Graham Secker.
For Q4 they have the following top-down recommendations in
Europe: overweight financials, especially banks, commodities and
autos, and are positive on the general re-opening trade.
More reading.
LIVE MARKETS-Another value bull
LIVE MARKETS-"Stars align for Value again"
(Danilo Masoni)
****
LOOMING HAWKISH SURPRISES FROM THE FED? (0925 GMT)
U.S. Treasury yields rose around 20 basis points in four
days as investors rushed to price the Federal Reserve's hawkish
shift and a sooner than anticipated exit from its post-pandemic
stimulus.
Now the big questions is: are we are done in terms of
repricing or will the Fed prompt more action in the following
weeks and months?
The Federal Reserve "probably feels a bit under pressure to
do something," says Thomas Liebi, head of U.S. and UK markets
investment strategy at Zurich Insurance.
"I think the risk is that the Fed is falling behind the
curve and will have to act more aggressively than before", he
argues.
"A hawkish surprise is possible, but probably more in 2022,
as the Fed is aware of financial stability risks linked to
excess liquidity,” he adds.
Excess liquidity boosts financial asset prices but can also
lead to sharp and disruptive corrections.
Chair Jerome Powell recently mentioned requests inside the
FOMC of a quicker tapering due to financial stability concerns.
The chart shows U.S. 10-year nominal and real yields
and their spread.
(Stefano Rebaudo)
*****
BOOHOO AND OUCH: INFLATION BITES (0847 GMT)
Far from being an abstract macro-economic threat, inflation
is now the core challenge for many corporates seeking to protect
their balance sheets.
FedEx, Nike, Kingfisher and now Boohoo are fresh examples of
this.
Shares in the British online fashion retailer dropped 10% at
the open after Boohoo warned freight inflation and higher wages
would impact full year profit margins.
"The new guidance is well below consensus expectations",
Liberum analysts commented, adding that they "expect some of
these cost pressures to remain going into FY’23".
Russ Mould at AJ Bell noted how higher costs hit profits, "a
force disrupting numerous industries".
And of this, more is likely to come.
"We might expect to see other companies performing a similar
degree of expectation management, albeit there is always
the chance some will be sandbagging," commented Neil Wilson at
Markets.com.
It must be said however that despite this quarter's setback,
analysts are broadly optimistic for the Boohoo stock.
Jefferies reduced its target price to 430 pence from 500
pence but still rates the fashion retailer a 'buy'.
"We continue to see the MT growth algorithm (core brands,
internationalisation, brand platform) as very much intact", they
wrote.
Some reading:
Boohoo's margins dented by higher freight and labour costs
Inflation and supply chain angst: "Welcome to warning
season"
Inflation and supply chain angst (part 2): FedEx
(Julien Ponthus)
*****
STOXX STILL RECOVERING (0737 GMT)
Gains prevailed at the European open today, helping the
STOXX 600 further recover from the heavy Tuesday losses
when fast-rising yields heightened rate hikes worries, spooking
markets.
The pan-European index was last up 0.7%, although still
below Monday's close. All sectors were positive with tech
- the biggest faller during this week's rout - leading
the way, up 1.5%.
A mix of M&A and earnings was driving top movers. A guidance
cut sent Colruyt down 7.3% to the bottom of the STOXX.
Tritax was hit by a share placement, while Sinch
rose 4% after a $1.9 billion deal to buy email
delivery platform Pathwire.
Out of the STOXX, Boohoo tanked 10% after revising
its margins lower, while rapid COVID-19 tester Oxford Nanopore
soared 34% on its IPO debut in London.
(Danilo Masoni)
*****
ONE COIN TO RULE THEM ALL (0707 GMT)
That the practicalities of minting a U.S. trillion-dollar
coin are actually being debated says a lot about the zeitgeist
of this final day of Q3 2021.
Yes, #MintTheCoin is a thing and while the idea of Treasury
Secretary Janet Yellen raising $1,000,000,000,000 through a
single coin to avoid a default seems like a fantasy, akin to
Tolkien's Mordor-minted creation in Lord of the Rings, the
possibility of a U.S. default is filtering into certain asset
prices.
Truth be said, the policy response to the COVID-19 market
crash has been unorthodox so far and central banks are still
buying securities by the tens of billions monthly even amid
surging energy prices, supply chain bottlenecks, job shortages
and above trend economic growth.
And talking about fairy tales, this week's equity and bond
selloff do seem to be pointing to the end of Goldilocks, that
sweet spot when markets bask in an environment of not-too-hot,
not-too-cold economic growth and inflation.
Yields are now quickly rising across the globe, MSCI's gauge
of stocks across the globe lost close to 1% over
the quarter and portfolio managers are quickly rotating
portfolios from growth stocks and tech, towards financial and
energy shares, which typically thrive with inflation.
Meanwhile, the reality of China's slowdown is sinking in.
Data just showed China's factory activity unexpectedly
shrank in September due to curbs on electricity use and elevated
input prices.
Still, equity markets are inching higher with Asian shares
outside Japan rising about 0.5%. The dollar is just off a
one-year high and oil prices have cooled a bit.
Futures for European bourses and Wall street are pointing
higher.
Key developments that should provide more direction to markets
on Thursday:
-- China manufacturing unexpectedly shrinks, services offer
support
-- China Evergrande shares swing as bondholders await word
on payments
-- Japan's factory output extends declines on car production
cuts
--UK economy bounced back by more than thought in Q2 before
slowdown
-- Cost inflation to dent Boohoo's full year margins
-- Diageo sees boost to margins as bars, restaurants open
-- UK Q2 GDP/current account
-- US Q2 final GDP/weekly jobless/final core PCE
(Julien Ponthus)
*****
EUROPE SET FOR AN UPBEAT EXIT FROM Q3 (0645 GMT)
This is the final day of Q3 2021 and investors seem ready to
kiss the quarter goodbye with an upbeat session.
European futures are up between 0.6% and 0.8% with Wall
Street derivatives on a similar trend.
The pan-European STOXX 600 is on course to score a quarterly
gain of close to 1%. September has however been true to its
reputation of a tough month for stock markets.
The STOXX 600 has lost 3.3% this month even if today's
expected gains should soften the blow.
(Julien Ponthus)
*****
