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*Dow, S&P 500 turn red, Nasdaq turns lower
*Energy leads S&P 500 sector gainers; staples weakest group
*Euro STOXX 600 index up ~0.5%
*Dollar down; gold, crude, bitcoin rally
*U.S. 10-Year Treasury yield slides to ~3.40%
Welcome to the home for real-time coverage of markets brought to
you by Reuters reporters. You can share your thoughts with us atESG INVESTORS KEEP A STERN BLIND-EYE TO ENERGY - BERNSTEIN (1055 EST/1555 GMT)
Environmental, social and governance (ESG) investors did not jump into the energy rally bandwagon in 2022 despite the
sector's outperformance and kept up with their "exclusion
policy" for the fossil fuel ESG funds, Bernstein says.ESG investors have not loosened their exclusion policy over the past year while 12% of them have strengthened their
exclusion lists, according to the brokerage's propreitary survey
from a pool of more than 50 institutional investors."We don’t expect the exclusionary approach to go out of favor anytime soon, especially as most investors have adopted an
exclusion policy for non-financial reasons," Bernstein says.Investors pulled more money from funds marketed as "sustainable" than they added for the first time in more than a
decade in 2022, hit by fallout from the Ukraine war, tumbling
financial markets and a political backlash against the industry.The funds, which reflect a range of environmental, social and governance (ESG) issues, are also set to lag the performance
of non-ESG funds for the first time in five years, data shows,
after the fossil fuel shares they typically shun soared.While shunning energy, funds with global mandates continue to overweight industries along the clean energy value chain like
electrical equipment and machinery, the brokerage says.ESG funds globally continued to be "underweight" oil and gas relative to benchmarks as of the third quarter in 2022. Funds
with global and Asian mandates became less "underweight" on oil
and gas during the quarter, while European and North American
ESG investors became slightly more "underweight."
(Siddarth S)
*****GLIMMER OF HOPE FOR EUROPEAN EQUITIES IN 2023 (1022 ET/1523 GMT)
European equities are finally seeing some light at the end of the tunnel, considering China's reopening and a lesser
stagflation shock in Europe limiting the downside risks to
corporate earnings, analysts at Barclays say.Energy services and utilities are set for another strong quarter, while insurance and banks are also poised for a decent
one on the back of higher rates, according to Barclays' outlook.Cyclical plays like construction, autos and luxury goods are also set for steady earnings.
NatWest Group PLC, HSBC Holdings PLC and BNP Paribas SA were among the top picks within the
banking space.On the other hand, refiners and exploration & production sectors could post weak earnings owing to a sharp decline in
energy prices.The oil and gas sector was the top performer in 2022 with, ending the year 24% higher as energy prices rose sharply.
Analysts were optimistic about higher earnings estimates for the broader market, barring commodities, at mid-high
single-digit growth."Although earnings won’t help equities this year, we believe that if rates volatility indeed subsides, stocks may be okay,"
the brokerage said, adding that price-to-earnings de-rating in
2022 should provide equities some cushion to absorb mild
earnings downside.The pan-European STOXX 600 fell around 13% in 2022, before gaining nearly 8% so far this year.
Easing inflation pressure could introduce a more stable rates backdrop in 2023, which in turn is likely to cushion
equity valuations, according to the analysts at Barclays.While resilient demand and pricing backdrop should support top lines, inventory destocking and still high costs are likely
to pressurize margins, the analysts added.
(Ankika Biswas)WALL STREET RALLIES AS PPI BACKS SLOW INFLATION NARRATIVE (1012 ET/1412 GMT)
Stocks on Wall Street are higher on Wednesday after a bigger-than-expected decline in U.S. producer prices offered
more evidence of receding inflation and kindled speculation the
Federal Reserve can soon curb its interest rate hikes.Energy and consumer discretionary are among leading S&P 500 sector gainers, while consumers
staples is the biggest loser.Semiconductors, small caps and Dow transports are all in the green. Growth stocks are more than
doubling the gains of value.The producer price index for final demand decreased 0.5% last month, the Labor Department said, while data for November
was revised lower to show the PPI rising 0.2% instead of 0.3% as
previously reported.Below is a snapshot of early prices on Wall Street:
HOW TO GUIDE FOR DISINFLATION [0930 EST/1430 GMT]
Strategists and economists at UBS believe that the pace of disinflation in 2023 could surprise investors just as much as
the pace of inflation last year.According to UBS, signs of easing inflation seem clearer and 80% of their sample of economies around the world saw lower
price increases in the second half of 2022 than in the first
half of the year."Based on our model, higher prices in 2021 were mostly caused by strong consumer demand after the Covid lockdowns
ended, when in 2022, supply bottlenecks, magnified by the
Russia-Ukraine war, were the main driver of inflationary
pressures," wrote the researchers."In 2023, we expect both demand and supply to play a role in the disinflation process."
Globally, they have selected stocks most positively or negatively impacted by this trend based on return sensitivity to
changes in inflation indexes, price performance during periods
of declining inflation and sensitivity of revenues to changes in
inflation indexes.While preference varies on the region, they are generally overweight on health care, tech, communication services and
consumer discretionary stocks given their past outperformance in
periods of declining inflation.UBS is underweight on energy stocks that have led gains last year, along with financials, industrials and materials, that
have lagged in disinflationary periods.Nevertheless, they expect global growth to be historically weak in 2023, at 2.1%, which is the weakest since 1993, outside
of the pandemic and the Global Financial Crisis.
List of UBS covered stocks with positive or
negative impact from disinflation’ based on UBS Strategy
framework
Positive Negative
Netflix Inc Live Nation Entertainment Inc
Ubisoft Entertainment SA Pearson PLCMoneysupermarket.com Group El Puerto de Liverpool SAB de Autohome Inc Swatch Group AG
Dollar General Corp Archer-Daniels-Midland Co
Valeo Sao Martinho SA
Flutter Entertainment GrainCorp Ltd
New Oriental Education & Exxon Mobil Corp
Technology
Clorox Schlumberger NV
Yihai International Equinor ASA
Natura & Co Holding Shell PLC
Neste Oyj Petroleo Brasileiro SA
Lancashire Holdings Investec PLCB3 SA - Brasil Bolsa Balcao Raymond James Financial Inc Abbott Laboratories Woori Financial Group Inc
Koninklijke Philips NV Sonova Holding AG
Celltrion Inc Republic Services IncSino Biopharmaceutical Ltd Alfa Laval AB Kone Oyj Nippon Yusen KK
Masco Corp Grupo Aeroportuario del
Pacifi
Skyworks Solutions Inc HP Inc
Zebra Technologies Corp Computershare LtdLogitech International SA Nucor Corp Win Semiconductors Corp K+S AG
Ecolab Inc Anglo American PLC
Akzo Nobel NV Public Storage
Aedifica SA Hammerson PLC
Warehouses De Pauw CVA Centrica PLC
China Jinmao Holdings Group Lt Naturgy Energy Group SAAmerican Water Works Co Inc GAIL India Ltd Enel SpA
S&P 500 INDEX: CAN IT MAKE THE LEAP? (0900 EST/1400 GMT)
In the wake of mostly cooler-than-expected PPI data and weaker-than-forecast retail sales numbers at 0830 EST, e-mini S&P 500 futures are gaining around 10 points, or 0.3%, in premarket trade.
This, as the S&P 500 index has been flirting with a number of key resistance hurdles, which since late August, have served to cap strength:
These barriers include the descending 200-day moving average (DMA), the resistance line from its January 2022 record high, and the descending 233-DMA, a Fibonacci-based moving average.
The SPX hit a high of 4,015.39 on Tuesday before closing at 3,990.97. Thus, the benchmark index managed a second straight close just above its 200-DMA, which ended at 3,978.17. This long-term moving average should dip to around 3,975 on Wednesday.
Since early April, the SPX has only managed three marginal closes above the 200-DMA before quickly sinking again.
The resistance line, which was around 4,010 on Tuesday, should scale down to around 4,006 on Wednesday, and the 233-DMA should fall to around 4,033.
Of note, the benchmark index's summer rally ended on Aug. 16 after these hurdles were challenged. The index then forthrightly collapsed to fresh lows, losing nearly 20% of its value into its October low.
And after once again probing these levels in early December, the SPX suffered a 4.4% three-day slide and then again in mid-December, upon a test of these levels, the SPX promptly slid as much as 8.2% in just seven trading days.
Since the resistance line was initially established using the early January 2022, record high and the late-March reaction high, the benchmark index has not registered a daily close above it.
Thus, traders will be watching to see if the SPX can build on any early rise, or if it will once again reverse to the downside.
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