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OCADO JUMPS 40%, BP EARNINGS, CHINA, FED LIFT MOOD (0820 GMT)
Ocado shares surged almost 40%, adding over 1.5 billion pounds in market value to the British online supermarket as it entered the South Korean market through a partnership deal with Lotte Shopping.
European shares also got support from blowout earnings from BP, and by a surge in basic resources stocks. Hopes that the U.S. Federal Reserve will signal that it could slow the pace of its rate hikes next month also lifted the mood.
The pan-European STOXX 600 index jumped 1%, after ending October at six-week highs. Leading the pack are the basic resource index, which is up 3% and oil & gas stocks, which are up 1%.
BP reported third-quarter profit of $8.15 billion, easily beating expectations, boosted by very strong natural gas trading as the company announced another $2.5 billion in share repurchases.
Commodities stocks also got a lift from China after an unverified note on social media suggested China may be planning to ease strict COVID curbs in March. The note triggered a sharp rebound following last month's savage selloff.
TRICK OR TREAT? (0713 GMT)
There's a sense of cheer among investors before the Fed's mid-week rate decision as markets seem to be pricing in an expected treat from the U.S. central bank.
Risk-on appetite is gradually coming back as global stocks flirt with their strongest levels in just over a month while the mighty dollar slips from a one-week high.
The Fed is set to raise rates by 75 basis points for the fourth straight time, bringing the target overnight lending rate to a 3.75%-4.00% range. But U.S. central bankers are likely to intensify a debate over when to downshift to smaller interest rate hikes to avoid sending the world's biggest economy into a tailspin.
Analysts at BlackRock Investment Institute are, however, still underweight on stocks as they see central banks on a path to overtighten policy.
And in Europe, there's little sign that inflation is peaking.
Consumer price growth in the 19 countries sharing the euro accelerated to 10.7% last month from 9.9% a month earlier, far outstripping expectations in a Reuters poll for 10.2%.
The broadening price pressures point to likely more interest rate increases from the European Central Bank after it raised rates by 75 basis points despite highlighting concerns about the economy.
"We think the ECB is still raising rates into a recession triggered by the energy shock and its hikes – and it will only stop once it sees the scale of economic damage caused," said the analysts from BlackRock Investment Institute.
On Tuesday, business surveys in Asia showed that the region's factory output weakened in October as global recession fears and China's zero-COVID policy hurt demand, adding to persistent supply disruptions and darkening recovery prospects.
Down Under, the Reserve Bank of Australia stuck with a 25 basis points rate hike as widely expected, while revising up its inflation outlook.
On the corporate front, BP is in focus as it reports results. On Monday, U.S. President Joe Biden called on oil and gas companies to stop 'war profiteering' and threatened a windfall tax on their record profits as he battles high pump prices with elections coming in a week.
Key developments that could influence markets on Tuesday:
Fed kicks off two-day meeting
U.S. Oct ISM
Europe earnings: BP, Rentokil
U.S. earnings: Pfizer, Prudential
EUROPEAN STOCKS SEEN HIGHER, INVESTORS AWAIT FOR FED, BOE (0645 GMT)
European futures are pointing to a start of the day in the black for bourses across the region as investors await for the Bank of England and the U.S. Federal Reserve meetings this week for any signs of easing in their aggressive monetary policy tightening cycles.
The Fed and the BoE are widely expected to raise their benchmark lending rate by 75 basis points this week in an effort to tame surging inflation. But investors remain hopeful the central banks will give signs they will start to slow their interest rates hiking paths in December or early next year.
On Monday, Eurostat data showed inflation in the 19 countries sharing the single currency accelerated to 10.7% in October from 9.9% a month earlier, beating expectations in a Reuters poll for 10.2% and way higher than the European Central Bank's 2% inflation target.
