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A SAFE BET IN CASE OF TRUMP VICTORY (1022 GMT)
Joe Biden is way ahead of his rival Donald Trump in polls on
U.S. elections, but what if the unthinkable happens?
According to SocGen emerging market strategist, Jason Draw,
if you want to bet on Trump staying in the White House a short
of U.S. dollar-ruble offers “attractive risk reward.”
The Russian ruble has recently been one of the weakest
currencies in emerging markets while the Mexican peso and North
Asia’s currency bloc some of the strongest as a Biden win has
been priced in by investors.
Under a new president the U.S. administration is expected to
be harder on Russia and “take a more traditional, approach to
China,” Draw says in a research note.
Short on ruble against Mexican peso and yuan renminbi might
not be the perfect fit as investors are reducing forecasts of
interest rates cuts in Mexico and China’s economy is expected to
remain strong.
“Meanwhile Russian fundamentals are solid and removing
geopolitical risk premium suggests, at the current oil prices,
U.S dollar-ruble should trade closer to 72,” he adds.
(Stefano Rebaudo)
*****
EUROPEAN SHARES IN THE RED, BANKS RISE (0835 GMT)
Earnings fail to support the whole European equity market as
investors are saddled with worries about the economic impact of
a second wave of coronavirus infections. Not to mention a threat
of a contested outcome of U.S. presidential elections and
further delays of a stimulus package.
The STOXX 600 is down 0.4%, with banking stocks
rising 1.1% supported by strong results from HSBC, up
5%, and Banco Santander, up 3%.
Tech shares show just a modest rebound, up 0.3%,
compared to yesterday’s fall triggered by SAP's weaker
than expected results. Capgemini is up 6.1% after good
results and after saying it expects the fourth quarter to show a
further but limited improvement.
Basic material and automaker stocks are the
worst performers, down respectively 1.4% and 1.3%.
(Stefano Rebaudo)
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ON THE RADAR: BETTER THAN EXPECTED RESULTS (0745 GMT)
European stocks are poised to open higher after yesterday’s
sell-off but pandemic-related worries continue to weigh.
A batch of good results are on their way while shares in SAP
show a modest 2% rebound in premarket trade after a
double digit fall yesterday.
In the tech space there could be a positive read-across for
European chip stocks following results overnight from
U.S.-listed NXP Semiconductors.
Novartis reports third-quarter profit of $3.47
billion, down from $3.21 billion a year ago but better than
analysts’ forecast of $3.2 billion.
HSBC Holdings Hong Kong-listed shares rose 5% as
the bank says it will embark on a transformation of its business
model, after posting a less-than-expected 35% drop in quarterly
profit.
Santander profit more than trebles in the third
quarter to 1.75 billion euros compared to the same period a year
ago when earnings were affected by multimillion one-off charges
in the U.K.
BP swings to a small profit in the third quarter,
beating forecasts.
Capgemini reports stronger-than-expected quarterly
revenues and says it expects the fourth quarter to show a
further but limited improvement.
Covestro shows a better-than-expected
third-quarter profit, citing cost-cutting measures, improved
volumes in Asia-Pacific and demand recovery.
Whitbread reports revenue 99% behind the previous
year and says near-term visibility remains limited.
On the M&A front Tiffany & Co received regulatory
approvals needed for the completion of its $16 billion
acquisition by French luxury goods group LVMH after it
received a nod from the European Commission.
easyJet raises $398.6 million from the sale and
leaseback of nine aircraft to boost its finances.
(Stefano Rebaudo)
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EUROPE’S STOCK FUTURES IN THE BLACK (0633 GMT)
European stock futures are in positive territory along with
their U.S. peers after yesterday’s selloff, but uncertainty
about the pandemic impact on the economy continues to weigh.
Surging coronavirus cases and fears of a double dip scenario
hurt risk sentiment as a recovery is partially priced in.
Gold’s resilience overnight suggests that safe-haven
positioning is increasing, amid slow progress in negotiations on
a U.S. stimulus package and fears of a contested outcome of U.S.
elections.
(Stefano Rebaudo)
