* European shares open higher, last up 0.3%
* Hopes of big U.S. stimulus provide support
* Tech, auto lead gainers, banks get yield boost
* France's Carrefour hit by govt opposition to takeover
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Hedging 2021 with the franc (1232 GMT)
With the storming of the U.S. Capitol and more lockdowns in
Europe, 2021 is proving quite unpredictable.
So how does one hedge it?
Well, the Swiss franc might be a good place to start
The franc remains an "attractive diversification currency"
because it "should react positively to global economic stress,
yet may also gain from an economic rebound," Thomas Flury, head
FX Strategies, and Gaétan Peroux, strategist at UBS Global WM
wrote in a note today.
While expecting the euro to gain against the franc in the
second half of 2021 on economic recovery prospects, the
strategists note the Swiss currency has stayed supported against
its euro zone counterpart due to a faster spread of coronavirus
and renewed lockdowns across the continent.
The euro is more sensitive to changes in global growth
expectations than the franc, they said, while pointing out that
the franc is currently overvalued due to the current crisis.
SOME UK STOCKS IDEAS (1140 GMT))
With Brexit risks out the way, UK equities have all it takes
to become an investors' darling this year.
The vaccination campaign and the prospect of big U.S. fiscal
stimulus have triggered reflation hopes and UK stocks' sharp
underperformance in 2020 could also play in their favour.
"UK equities are back on investors’ radar, now that the tail
risk of a crash-out is gone," Barclays strategists say, noting
how stocks in general should be an attractive investment this
year given a rebound in earnings and good valuations.
In a note to clients they add that even if it is unlikely UK
stocks will outperform "the more pro-cyclical" euro zone index,
the value, commodity and financial-heavy British index still
"makes it a prime beneficiary of reflation".
Their UK picks are indeed commodities, financials,
industrials and discretionary, while it is best to avoid
healthcare (expect AstraZeneca, which has broader R&D
pipeline than its peers"), staples, telecoms and real estate.
In terms of single companies, top picks are TP ICAP
, Imperial Brands, BT Group, Lancashire
, AstraZeneca, Diploma, Coca-Cola Hellenic
<CCH.L)>, Melrose and IG Group.
The bank's underweight stock idea is Pearson, as it
expects the new CEO to present a cautious outlook for the year.
TECH AND BANKS LIFT EUROPE, OFFSETTING FRENCH PROTECTIONISM
Shares in Europe are off to a positive start this morning
helped by strong gains tech stocks, while a rise in bond yields
gave fresh impulse to banks, as investors prepare for details of
another big fiscal stimulus package in the U.S.
Tech rose 1.2% with chip makers in demand after Taiwan
Semiconductor posted a stronger than expected rise in quarterly
profit. Prosus added nearly 5% on reports the Trump
administration has scrapped plans to blacklist Chinese tech
giants, including Tencent.
Autos were the top sectoral gainers, up 1.7%, with
carmarkers Peugeot and Fiat Chrysler and Volkswagen all up 3-4%.
Their gains offset a big slide in Carrefour
shares, down 7% to the bottom of the STOXX, after a French
minister voiced opposition to a planned takeover of the French
retailer by Canadian store operator Alimentation Couche-Tard.
Here's your opening snapshot:
KEEP CALM - MORE STIMULUS IS ON ITS WAY (0757 GMT)
U.S. President-elect Joe Biden is preparing to outline today
his plans for another round of big fiscal stimulus in the
world's largest economy and a CNN report that the boost could be
worth around $2 trillion has put investors in an upbeat mood.
The news is overshadowing Donald Trump's impeachment, with
Japan's Nikkei scaling a new three-decade high and European and
U.S. equity futures pointing to a positive start.
Robust trade data from China is also keeping the bulls
running, alongside reports the Trump administration has scrapped
plans to blacklist Chinese tech giants Alibaba, Tencent and
Baidu -- Hong Kong-listed Alibaba and Tencent shares are around
Now markets are eager to hear from Fed Chair Jerome Powell
after other officials talked down the prospect of a scaling down
its massive bond buying programme. With one even mooting the
possibility of more asset buys and strong demand at a 30-year
debt sale, U.S. 10-year bond yields are back at 1.10%, around 9
basis points off highs hit earlier this week.
Meantime a new government crisis in Italy could liven up
bond markets in Europe, even though it comes as little surprise
for a country that has had 131 government in the last 160 years.
ECB bond buying also means its impact could be cushioned.
On the corporate front, France has voiced its usual
objections to the $20 billion offer for retailer Carrefour by
Canada's Couche-tard. Earlier, Taiwan Semiconductor (TSMC)
confirmed how remote working was fuelling demand for devices
requiring high-end chips soared, sending quarterly profits to
Key developments that should provide more direction to
markets on Thursday:
-Fed chair Powell speaks
-UK RICs housing survey
-Germany 2020 GDP
-US initial jobless claims
-Fund giant BlackRock reports quarterly earnings
-Tesco Britain's biggest retailer followed rivals in
reporting buoyant Christmas trading, with UK like-for-like sales
growth at 8.1% in the six weeks to Jan. 9.
U.S STIMULUS TALK LIFTS EUROPEAN STOCK FUTURES (0621 GMT)
European shares look set to open up slightly this morning,
as talk of fiscal stimulus in the U.S. returns to support
sentiment along with stronger than expected data out of China.
A CNN report that President-elect Joe Biden is mulling a
stimulus package as large as $2 trillion lifted shares in Asia,
while futures on the DAX and FTSE indexes are up 0.3-0.4%.
Earlier data showed that China's exports grew more than
expected in December as global demand for Chinese goods remained
solid, while import growth quickened.
S&P futures are also pointing to a positive start on Wall
Street, up 0.3%.