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* European shares up 0.1%
* LVMH and SAP rise after strong results
* Tech stocks lead gains
* JPM profit surges on trading, shares dip
April 14 - 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
INFLATION CONCERNS? NO, WORRIED ABOUT THE FED STANCE (1059
GMT)
Inflation might be worrying for equity investors, but the
genuine concern is about whatever might endanger the Fed’s
accommodative policy stance.
Things were pretty good yesterday as U.S. data confirmed the
Fed’s view that the higher inflation will be transitory.
But the risk is “that strong growth and inflation data
releases in the coming month fuel markets’ nervousness about the
policy outlook and thus challenge current goldilocks,” namely
expectations for solid growth coupled with low-interest rates,
Barclays analysts say.
But let’s face it, generally speaking, inflation is not
necessarily bad for stocks.
“Equities offer a natural hedge against inflation, as it
positively correlates with earnings. EPS upgrades have allowed
equities to shrug off rising yields,” they add.
Besides, stocks "have likely become more sensitive to
changes in real rates expectations, which have been negatively
correlated to P/E’s in recent years.”
Looking at historical S&P returns and U.S. real rates,
“equity performance can remain positive as long as real rates
stay close to zero.”
In the current scenario they “have room to travel much
higher before starting to negatively impact equity returns.”
(Stefano Rebaudo)
*****
ESG: A CROWDED TRADE? (0916 GMT)
After an unexpectedly strong 2020 performance ESG
investments have been dented recently by the shift into value
and concerns are growing that these strategies could start to
lag if the rotation continues.
According to Citi, one way to answer this question is to
look into whether ESG has become a crowded trade and, if so,
what could that mean for its performance going forward.
Here's what analysts at the U.S. bank found out.
"Despite expectations, it turns out that the ESG trade is
not yet overly crowded. Furthermore, the crowded ESG stocks have
delivered the best performance during 2019 and 2020 and, whilst
ESG hasn’t delivered the same outperformance so far in 2021,
it’s mainly the least crowded ESG names which have driven
performances lower," they said.
"And whilst the shift of wealth into high ESG stocks
appears to be more of a long-term story, it’s of interest to
note which of those companies currently highly ranked by their
ESG score are also uncrowded since they stand to gain the most
from a performance perspective if more wealth is allocated to
them," the added.
(Danilo Masoni)
*****
TECH STOCKS PROP UP EUROPE (0738 GMT)
Tech stocks support European equities as the NYSE FANG+TM
index hit fresh record highs on Wall Street after yesterday's
U.S. inflation data.
Consumer price numbers reassured investors that the Fed
accommodative policy stance would remain in place, boosting tech
stocks, but in Europe, virus worries continue to weigh on risk
sentiment.
U.S. authorities' recommendation that the Johnson & Johnson
vaccine has to pause has ramifications in Europe after the
company said it would "proactively delay" their vaccine rollout.
The STOXX 600 index is up 0.1%, with the tech stock index
up 1.2%.
LVMH's shares rose to record highs after the
company sales bounced back far more quickly than expected in
early 2021.
EasyJet stocks are up 2.2% after the company said it
expected to start to fly more from late May onwards, shrugging
off worries about the third wave of COVID-19 infections in
continental Europe.
(Stefano Rebaudo)
*****
IGNORE INFLATION AND KEEP BUYING (0712 GMT)
That seems to be the mantra in markets as world stocks hit a
record high overnight even as data showed U.S. consumer prices
rose by the most in more than 8-1/2 years in March at 2.6%.
With bond markets taking the inflation data in their stride,
most Asian shares followed Wall Street higher. European stock
markets are opening higher and U.S stock futures are
consolidating gains following record highs for the S&P and
Nasdaq indexes.
Calls to halt Johnson & Johnson’s coronavirus vaccine
rollout meanwhile do not appear to be weighing on stocks.
A solid U.S. bond auction meanwhile fuelled a drop in
Treasury yields, with a $24 billion of 30-year bonds sold at an
above-average bid-to-cover ratio, a gauge of demand.
The question dogging bond markets now is whether benchmark
10-year Treasury yields can break below 1.6%, which
would signal that sentiment is turning after yields hit a
14-month high of 1.776% in March 30 on bets that massive fiscal
stimulus would stoke inflationary concerns.
Softer yields also helped global stocks reclaim the $90
trillion market capitalisation crown with gains led by mega-cap
technology stocks. Bitcoin also hit a record high nearing the
$65,000 mark.
The dollar declined broadly with the greenback looking
particularly vulnerable against the yen and the euro, which
looks set to reclaim an early March high above $1.20.
Red-hot copper prices meanwhile could receive a further
boost from Goldman Sachs, which is forecasting copper at $15,000
by mid-decade. It predicts demand to grow 600% by 2030.
Elsewhere, Singapore and New Zealand’s policymakers kept
their policy settings in neutral at their respective policy
meetings.
Key developments that should provide more direction to markets
on Wednesday:
- LVMH shares seen rising as much as 5% after like for like
sales growth smashed expectations.
- Archegos Capital related share selling eyed after Credit
Suisse put large share blocks of Discovery Inc and iQIYI Inc on
the market.
- Fed Chair Jerome Powell is scheduled to speak later in the
day at the Economic Club of Washington.
- U.S. Q1 earnings: JP Morgan Chase, Wells Fargo, Goldman
Sachs,
- Fed Beige Book due out.
- Eurozone Industrial production data February.
- ECB President Christine Lagarde to speak.
(Saikat Chatterjee)
*****
EUROPE IN THE BLACK AS U.S. INFLATION FEARS FADE (0533 GMT)
The European stock futures are in the black as fears of a
much stronger than expected U.S. inflation which might endanger
the Fed’s accommodative stance, fade after yesterday’s data.
The S&P 500 and the NYSE FANG+TM index hit fresh record
highs after U.S. consumer price numbers confirmed the view that
the higher inflation in coming months will be transitory.
Johnson & Johnson delaying the rollout of its COVID-19
vaccine after cases of extremely rare blood clots in people
after receiving the shot is dampening risk sentiment in Europe,
which is lagging in its vaccine campaign.
Fed’s chairman Jerome Powell is scheduled to speak later
today in Washington.
(Stefano Rebaudo)
*****
