Last checked at 
* European shares off lows, down 0.2%
* ECB slows down PEPP buying as expected
* EasyJet tumbles on cash call plans
* U.S. futures dip, Asian shares fall
Sept 9 - 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
ECB'S PEPP SLOWDOWN SENDS EURO ZONE BANKS IN THE BLACK (1221
GMT)
The ECB's decision to slow down PEPP bond buying received a
warm welcome from euro zone banks which jumped into positive
territory soon after the announcement.
The move also went well through the broader market with the
pan-European STOXX 600 reducing its losses from -0.4% to about
-0.2% shortly after 1145 GMT.
All in all it seems that the move had been widely expected
and the 'slowing-down-bond-purchases-is-not-really-tapering'
message properly massaged to investors in the previous days.
"I think it has been largely priced by the market",
commented AXA Group Chief Economist Gilles Moec.
Similar take from Arne Petimezas, an analyst at AFS Group in
Amsterdam.
"Market seems to shrug off the taper language as in the
greater scheme of things the undershooting of the purchase
commitment won't be large, if they undershoot at all", he said.
"Market had already moved on the taper stuff in past few
weeks," he added.
Here's our story on the ECB's move:
ECB dials back support but signals no end to stimulus
(Julien Ponthus, Marc Jones, Danilo Masoni and Stefano
Rebaudo)
*****
JAPAN STOCKS? DON’T GET TOO EXCITED ABOUT POLITICS (1116
GMT)
Japanese stocks staged an impressive winning streak with
investors betting that the economy would recover further thanks
to more stimulus following Prime Minister Yoshihide Suga's
resignation.
The big unknown now is whether Japanese equities have still
room to grow.
UBS analysts say investors shouldn’t get too excited about
politics as they do not expect “the candidates to be pursuing a
major shift in policy” concerning reflation or significant
corporate governance reform.
They flag instead the risk of political instability after
the general election that will take place later this year.
But, earnings revisions have indeed been solid, and
“companies exposed to Capex spending are likely to continue to
do well,” they say.
Besides, “Japanese equities do look inexpensive versus
global equities,” they add.
(Stefano Rebaudo)
*****
DID EQUITY RISK PREMIUM TURN NEGATIVE? (1001 GMT)
A positive equity risk premium is crucial for investing in
equities as it means stocks provide a higher return than
risk-free bonds.
According to most analysts, this is the case right now as
far as yields stay around the current levels.
But, according to BCA Research, the US “equity risk premium
(ERP) has turned negative for the first time since 2002.”
“We deduce that the equity market is very richly valued both
in absolute terms and relative to bonds,” BCA analysts say.
They flag that, according to some analysts, a U.S. equity
market’s earnings yield of 4.4% means that stocks will deliver a
future long-term real return of 4.4% per annum.
Compared to the 10-year TIPS real yield of -1.3%
, this would offer an excess return or ‘equity risk
premium’ of a comfortable +5.7%.
But, “this analysis is deeply flawed,” they add.
According to their valuations, an earnings yield of 4.4%
translates into a prospective 10-year nominal return of just 1%.
(Stefano Rebaudo)
*****
AIRLINES AND PROSUS DRAG EUROPE ON ECB DAY (0757 GMT)
It's risk-off for European shares at the open with tapering
talks weighing ahead of the ECB's policy decision later on
today.
The cash call at EasyJet also weighs and China's regulatory
push is hitting Prosus, providing investors a lot of good
reasons to take risk off the table.
In early deals the STOXX 600 is down around 0.7%
with EasyJet leading the way down more than 9% and
dragging the whole airline sector lower.
Prosus is also shedding a decent 5%.
Assa Abloy's $4.3 billion acquisition of a home
improvement business from Spectrum got thumbs up and its shares
rallied 6% to the top of the pan-European equity benchmark.
Here's your opening snapshot:
(Danilo Masoni)
*****
OVER TO YOU, CHRISTINE (0659 GMT)
Investors are increasingly uneasy at signs central bankers
in Europe and elsewhere are mulling a retreat from the
easy-money policies that have provided much of the ammunition
for stock market gains. So ahead of an ECB meeting where a
stimulus slowdown is likely to be debated, stocks are sliding.
September has already seen many major indexes, from the S&P
500 to STOXX 600, ease after multi-month winning
streaks. Both European and U.S. equity futures
point to more falls ahead on Thursday, while Treasury and Bund
yields are off the mid-July highs hit earlier this week.
But there's much more than an ECB meeting to fret about --
Beijing's regulatory crackdown shows no sign of a letup.
Chinese gaming and media stocks - including Tencent Holdings
and NetEase - have suffered further sharp
falls after regulators summoned gaming firms to ensure they
implemented new rules for the sector.
The impact of the widening crackdown is being felt as far as
Tencent shareholder Prosus in Amsterdam which is set to
open 3.5% weaker.
Shares and bonds in the embattled Evergrande Group
too slumped further after media reports the property developer
would suspend interest payments due on some loans and all
payments on its wealth management products.
And then there is the U.S. debt ceiling quagmire, with
Treasury Secretary Janet Yellen warning again that cash and
extraordinary measures might run out in October.
On the data front, China factory gate inflation jumping 9.5%
to a 13-year-high in August shows no let up in price pressures.
In Britain, a lack of new homes for sale boosted house prices
again.
Corporate news a-plenty too. EasyJet will raise more
than 1 billion pounds ($1.4 billion) through a share sale.
Similar news elsewhere in the travel sector too, with Japan
Airlines announcing $2.7 billion in borrowing to
weather the prolonged COVID-19 impact.
Key developments that should provide more direction to markets
on Thursday:
ECB holds monetary policy meeting and presser
-Lloyd's of London swung to H1 pre-tax profit of 1.4 billion
pounds, helped by rising premium rates
-Fed speakers: San Francisco Fed President Mary Daly 1205 GMT;
Chicago President Charles Evans 1505 GMT
-Emerging markets: Malaysia, Peru, Serbia, Ukraine central bank
meetings
Auctions: U.S. 30-year bonds, 4-week t-bills.
U.S. earnings: Oracle
(Karin Strohecker)
*****
ANOTHER DOWN DAY IN STORE (0637 GMT)
Debate over tapering is heating up and on the day the
European Central Bank could claw back stimulus, equities in
Europe look set for another session of profit taking from record
levels.
Futures on the Euro STOXX 50, DAX and FTSE 100 indices are
falling between 0.4% and 0.9% following losses on Tuesday,
suggesting the pan-European STOXX 600 index could near 6-week
lows if things worsen during the session.
Even if support should be dialled back, any move is likely
be at the margins and the ECB is expected to emphasize the move
is not tapering and signal copious support for years to
come.
Over in Asia, equities fell as regulatory jitters hit gaming
and media stocks in China once again, adding to worries about
central banks reducing support. U.S. index futures meantime
point to slight declines on Wall Street later on.
In European corporate news, M&A could spice up the day.
UK gambling firm 888 Holdings agreed to 2.2 billion pounds
deal to buy William Hill's non-U.S. assets, while lock maker
Assa Abloy is to buy Spectrum Brands' hardware and home
improvement unit for $4.3 billion.
RWE is another one to watch after news Activist fund ENKRAFT
has taken a stake in the German utility, calling for separation
of its lignite operations.
(Danilo Masoni)
*****
