Last checked at 
* STOXX down 0.1%, CAC hits 21-year high
* Healthcare leads sectoral gainers
* Adecco falls after Q3, HelloFresh shines
* U.S. stock futures tick up after record close
Nov 2 - 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
FTSE BUYBACK BONANZA (1337 GMT)
BP likes to think of itself as a "cash machine", its CEO
told Reuters today after the oil major just added more than a
billion dollars to its share buyback programme.
To be fair, it seems much of London's FTSE 100 is quite keen
on splashing some green.
"The $1.25 billion buyback (...) takes the total buyback
bonanza so far to £18 billion from 21 FTSE 100 companies, adding
to the £78 billion analysts believe they will pay out in
ordinary dividends this year", AJ Bell Investment Director Russ
Mould said in a note.
Here's a table from the AJ Bell note detailing the buybacks
which have been announced by British blue chips:
Some reading:
'Cash machine' BP boosts share buyback as profit surges
[nL1N2RT0CF)
(Julien Ponthus)
*****
BOE’S COMMUNICATION CHALLENGES (1222 GMT)
Markets still have a mixed view about whether the Bank of
England will raise interest rates at its next policy meeting,
but they seem to agree that the BoE will have some communication
issues to sort out.
First, it must convince markets that it will not hurt the
recovery by overreacting to inflation risks.
“The BoE cannot say with any real confidence that the UK
will not face a situation in which it has to trade-off economic
performance for controlling inflation,” Berenberg economists
say, recalling inflation recently surprising on the upside.
Then, they mention a possible distortion of the policy
signal that could come from the forecast revisions.
They recall that official economic projections use the
overnight indexed swap (OIS) curve to assume the Bank Rate over
the forecast horizon.
The next forecast will be based on a Bank Rate of 1.25% by
the end-2022 that falls by 40bps by the end-2025, while the last
projections assumed a Bank Rate that slowly rose to 0.5% by the
end of Q3 2024.
“This huge shift in both the level and profile of the Bank
Rate will make it near impossible to compare the November
projections to the August ones,” the Berenberg economists add.
The Bank of England heads into its most unpredictable
interest rate decision in years this week, leaving investors and
analysts on edge about the chance of its first hike since the
pandemic struck the world economy.
See Berenberg's chart below:
(Stefano Rebaudo)
*****
VALUE CAN OUTPERFORM WELL BEYOND PMI PEAK (1124 GMT)
Have you ever worried that growth passing its peak could
mean less rosy times for value stocks?
Well, if your answer is yes, a read of today's Credit Suisse
strategy piece may offer reassurance.
Research by the Swiss bank finds that value can outperform
up to 10 months after the peak in PMIs. It says therefore
investors should stay overweight European value and notes the
following tailwinds:
1. Value tends to outperform when Bund yields rise or
inflation
expectations move up
2. Value is nearly 3 standard deviations cheap against
growth
3. Value continues to see superior earnings momentum to
growth
4. Value can outperform up to 10 months after the peak in
PMIs
5. Value performs better when overall market EPS revisions
are
positive, as they are now
6. Value rallies see value become overbought, and currently
it is
not
Want any names? CS mentions Barratt , Anglo
American, BNP, Sanofi and Adecco
.
(Danilo Masoni)
*****
CAC 40: WHAT'S NEXT? 7,000 POINTS? (1107 GMT)
French blue chips have just cruised back to the levels they
enjoyed in 2000 when a trading frenzy around the early
development years of the internet led to a speculative bubble
which ended in tears.
Paris' CAC 40 reached a high 6,920 points this morning and
is only 24 points away from its all time high milestone of
6,944.77 reached on September 4 2000.
For Patrick Delépine, an equity sales trader at Oddo in
Paris, there is clearly a positive mood across markets as we
wait for the Fed's meeting on Wednesday.
He noted that an encouraging earnings season, upbeat fiscal
stimulus expectations, fading worries about the global supply
chain and COVID-19 infections were among the factors boosting
morale.
Delépine argued however that with Wall Street hitting new
record last night, there was no element of exceptionalism for
France's CAC 40, which is just going with the flow.
What's next then? Well, as Delépine pointed out, the CAC 40
gained over 100 points in just three sessions so it would seem
that the 7,000 points milestone is not out of reach.
(Julien Ponthus)
*****
DID ANYONE SAY IPO FATIGUE? (1018 GMT)
True, most 2021 European IPO debutantes are now trading
below their offering price but this doesn't necessarily mean the
listing boom is over.
An analysis by Liberum indicates that "there is no such
thing as IPO fatigue" and that past stock market returns have
more influence on IPO activity than stock market volatility.
According to the UK investment bank, IPO volumes should
reach this year the highest in at least 16 years.
"We have seen extreme levels of IPO activity in the first
three quarters of this year and activity levels are likely to
decline in Q4 and early 2022. But our forecasts indicate that we
are only going back to the averages of 2018 and 2019 which means
that the number and volume of IPOs should remain healthy," they
write.
Liberum forecasts 2021 total IPO volume of $93.2 billion in
the U.S., 31.6 billion euros in the euro zone and £14.7 billion
in the UK.
"All of these are the highest levels recorded since our
records begin in 2005," they note.
(Danilo Masoni)
*****
FRANCE'S CAC 40 A WHISKER FROM DOTCOM BUBBLE HIGHS (1002
GMT)
All it would take is just a few points to take French blue
chips to the highs they enjoyed more than 20 years ago when the
dotcom bubble was in full swing.
The CAC 40 is currently up 0.22% at 6,908.7 points, just a
whisker below the 6,913.67 level reached in August.
Beyond that, the CAC 40 would be back to its highest levels
since September 2000, when telcos, media and tech reigned
supreme.
(Julien Ponthus)
*****
EUROPE'S HEALTHCARE INDEX HITS NEW RECORD HIGH (0932 GMT)
With the STOXX 600 losing 0.1%, one wouldn't expect to see
fresh records across European equities and yet!
The Healthcare index, up about 0.7%, has reached a new
record high of 1,065.03 points, just above the 1,062.19 level
reached on August 18.
Much of the credit must be given to Germany's Fresenius
Medical Care and its parent company Fresenius, which are rising
4% and 5% respectively.
Fresenius Medical Care said it aimed to reach annual cost
cuts of 500 million euros by 2025 by streamlining its company
structure which will lead to up to 5,000 fewer jobs globally.
Another big boost for the index are Demant shares up 5%
after the Danish hearing aid maker announced a profit outlook
upgrade.
Another all-time high has been breached on the consumer
staples space with the sector's pan-European index building up
on the record it reached yesterday.
The Food and Beverages index is up 0.4% and made it to a
high of 831.89 points this morning.
It might not be over in terms of milestone as far as this
session is concerned though.
The STOXX 600 is just one little point away from yesterday's
record so even a slight risk-on mood swing could bring it to new
highs.
(Julien Ponthus)
*****
MINERS SHARES DOWN, HEALTHCARE AND TECH UP (0853 GMT)
Miners’ stocks are driving down European equities, with
investors in a cautious mood ahead of this week’s central banks
policy meetings.
The Stoxx 600 index is down 0.2% after hitting a
new all-time high yesterday, with basic materials stock index
falling 2.8% following a drop in the Australian stock
market as iron ore prices fell on the poor demand outlook.
Australian shares fell after the central bank abandoned an
ultra-low target for bond yields and opened the door for an
earlier interest rate hike.
European banks came under selling pressure despite
expectations of rising yields, with the Stoxx bank index
down 0.8% after European Central Bank supervisor Andrea Enria
said banks’ expectations a further drop in the amount of soured
loans on their books “may be overly optimistic.”
The healthcare stock index is in positive territory,
up 0.5%, as shares in Fresenius are up 3% after the
company firmed up its 2021 forecast.
The tech stock index is up 0.2%.
Still, among single stocks, Hellofresh jumped 14%
after the company raised its full-year sales guidance.
Shares in Standard Chartered are among the
session's losers, down 5.7% after results; THG stocks
fell 4.8% as Blackrock is about to sell nearly half of its stake
in the company at a 10% discount.
(Stefano Rebaudo)
*****
AUSSIE CBANK CAVES IN, WHO'S NEXT? (0828 GMT)
Another central bank has opened the door to earlier interest
rate hikes than flagged. Australia officially ditched its 0.1%
target for three-year debt and omitted projections for rates to
stay unchanged until 2024 at least. Markets are keeping up
pressure on the RBA, pricing rates to rise from next May.
The RBA sets the stage for the U.S. Fed, BoE and the Norges
Bank later this week, with markets already pricing multiple rate
hikes in the coming year given rising inflation.
But...stock markets don't seem unduly perturbed. MSCI's
global index is back to record highs hit nearly two months ago
and Wall Street is scaling new record peaks.
Leaving aside Monday's 8.5% jump in Tesla, so-called value
stocks outperformed, indicating possibly that recent "curve
flattening" momentum on bond markets is abating. Indeed, the
spread between two-and 10-year U.S. yields is 10 basis points
wider than last Thursday.
Several analysts, including those at JPMorgan, see recent
bond and money market moves as technically driven and expect
normalcy to return. They advise buying more cyclical stocks to
position for higher longer-dated yields. Watch this space.
Meanwhile, inflation is marching higher almost everywhere;
South Korean price growth accelerated to a decade peak, staying
above-target for the seventh straight month. High prices slowed
U.S. manufacturing in October, the closely watched ISM survey
showed on Monday. It also hinted at some moderation in demand
.
What's helping stocks stay aloft is of course the earnings
season. CEOs may be bemoaning cost pressures, yet there's no
sign of margins being hit. U.S. Q3 earnings are expected to have
climbed 39%, Refinitiv IBES says, versus the original Q3
prediction for 29% growth.
And then there's M&A -- $4.7 trillion in deals have been
announced year-to-date, according to Refinitiv.
Key developments that should provide more direction to markets
on Tuesday:
-StanChart Q3 profit doubles as bad loans shrink, trade finance
booms
-BP to repurchase another $1.25 billion of shares by early 2022,
after buying $900 million in Q3
-Shipping group Moller-Maersk said record-high freight rates
boosted earnings despite lower container volumes due to port
congestion
-U.S. earnings: Dupont, ThomsonReuters, Estee Lauder, Pfizer,
ConocoPhilips, Ralph Lauren, T-Mobile, Mondelez, Western union,
Prudential
(Sujata Rao)
*****
EUROPE IN A MORE CAUTIOUS MOOD (0727 GMT)
European stock futures are slightly lower along with their
U.S. peers, as investors switch to a more cautious mood after
equities set all-time highs on Monday ahead of this week’s
Federal Reserve and Bank of England policy meetings.
Earnings remain the main focus, but some analysts believe
the 'taper trade' has not been priced in by markets, and there
is room for bond yields to spike higher, dampening risk
sentiment across the board.
Chinese stocks headed lower, dragged down by financials and
consumer firms despite investor expectations that Beijing will
pledge more support for the economy.
(Stefano Rebaudo)
*****
