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A TECH SURGE AND AN EDF MELTDOWN (0848 GMT)
All the FOMO (fear of missing out) that had been building up
in Europe since Wednesday's Wall Street rally has led to quite
an upbeat open, with tech stocks surging about 3%.
But while the good mood is keeping all equity sectors in
positive territory, France's EDF stands out for being deeply in
the red.
The energy giant is down 8% after cutting its 2021 core
profit guidance, following the discovery of faults in a safety
system at the Civaux nuclear power station.
On the macro front too, data just showed French business
activity expanding at a slower pace in December. Still that isnt
preventing the Paris bourse from cruising at the same speed as
the pan-European STOXX benchmark, up about 1.4%.
Across Europe, the main bourses are all up over 1%.
But while growth-focused tech stocks are benefiting from the
same tide which lifted the Nasdaq boat last night, some smaller
individual stocks are shining even more.
Notably Britain's Domino's Pizza Group is up over
20% after announcing a profit-sharing deal with franchisees,
ending more than two years of negotiations.
Cineworld too is up 9%, bouncing off Wednesday's big falls
triggered by a court ordering the chain to pay $957 million in
damages to rival Cineplex for abandoning a planned takeover.
(Julien Ponthus)
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CENTRAL BANKING THURSDAY (0812 GMT)
The Fed is out of the way, having announced faster stimulus
tapering, signalled three rate hikes for 2022 and upped
inflation forecasts. And of the ten central bank meetings
scheduled for Thursday, some will deliver rate hikes and most
others are likely to flag some form of policy tightening ahead.
Given a hawkish Fed was already pencilled in, the dollar and
U.S. yields rose modestly. But its message fired up stocks,
especially lifting the tech-heavy Nasdaq more than 2%, the
assumption being that long-term yields won't go too far.
That momentum has carried into Thursday, with world stocks
rising, S&P 500 and Nasdaq futures up as much as 0.7% and a
pan-European bourse Europe tipped to open almost 2% higher.
Japan's Nikkei enjoyed its biggest gain in almost seven
weeks, helped also by data showing exports up 20.5% from
year-ago levels (Full Story). PMIs though showed a slowdown; the
year's last set of PMI advance readings are due across the rest
of the developed world today.
But back on the central banking front, policymakers in
Europe may find it hard to ignore risks from the Omicron COVID
variant -- a 25 basis-point Norwegian rate hike for today has
gone from a dead-cert some days ago to a probably after the
expansion of COVID curbs.
The Bank of England is in a worse bind, with skyrocketing
Omicron cases on one hand and 5%-plus inflation on the other.
In any case, it will end its bond-buying scheme, and the
European Central Bank shortly afterwards is expected to flag its
pandemic-time programme will expire on schedule in March.
Emerging markets, way ahead of the pack in the rate-rise
race, will see Mexico raising rates for the fifth consecutive
time. Expect Russia to follow with a 100 bps move on Friday.
But there are exceptions, and Turkey is seen carrying on
with rate cuts, despite 20%-plus inflation and a fast-falling
currency. Anticipating a 100 bps cut on Thursday, the lira has
blown past 15 per dollar, having started 2022 around 7.4 TRY=D3.
Key developments that should provide more direction to markets
on Thursday:
-Philippines c.bank hold rates (Full Story); Taiwan, Egypt,
Indonesia decisions
- Shimao bonds benefit from news of possible support from
Shanghai regulators
-Markit Dec flash PMIs
-Swiss National Bank meeting (Full Story)
-Norges Bank meeting (Full Story)
-Bank of England (Full Story)
-ECB policy meeting (Full Story)
-Turkey, Mexico policy meetings (Full Story) (Full Story)
-U.S. initial jobless claims/Philly Fed index/industrial output
-US earnings: FedEx, Accenture, Adobe
(Sujata Rao)
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SET TO CATCH UP WITH THE FED RALLY (0716 GMT)
It's catch-up time!
European futures are rushing up this morning, trading well
over 1% after Wall Street rallied and Asia ticked up thanks for
to a well-received Fed policy statement last night.
Powell struck an upbeat tone about the U.S. economy and
seemed ready to raise interest rates to keep inflation in check.
The upbeat mood however in Europe will be subject to how
well both the BoE and ECB meetings go down today.
Juggling both inflation and the pandemic is a tricky
balancing act for policy makers.
(Julien Ponthus)
*****
