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EUROPE TURNS RED, TYCOON NIEL BOOSTS TELCOS (0743 GMT)
Given the state of play in Asian markets, there was little
hope European bourses would make it to positive territory at the
open in a session packed with Q2 earnings.
Losses are quite substantial with the STOXX 600 losing about
0.8%, roughly in line with S&P 500 futures.
All sectors are losing ground, with miners and travel and
leisure being the most hit, down 2.2% and 1.9% respectively.
On the bright, actually, very bright side, the telecom
sector got a boost from French tycoon Xavier Niel who announced
he wanted to take his group Iliad private with a 61% premium
offer.
Sure enough, the share price jumped to the 182 euros offer
price from the 113 euros it was standing at yesterday.
No big surprise then to see telcos outperforming, losing
just 0.4%. Belgium's Proximus was up about 3% after its Q2
results.
Among the top movers of the session, many are blue chips
getting hammered after publishing their results.
In London, Intertek is down 8.6%, Frankfurt-listed Fresenius
has lost 7.2% while in Madrid, wellness equipment-maker Fluidra
took a 5% hit.
There are some winners though. Italy's Unicredit is up 5%
after a higher-than-expected Q2 and in Paris, Euronext won 3%.
(Julien Ponthus)
*****
READY FOR A SUMMER LULL? (0707 GMT)
We are almost at the end of a pretty breathless month: The
peak growth versus peak inflation debate got a fresh lease of
life thanks to Delta variant surges, a cooling of commodities'
red-hot rally and of course, Beijing's big regulation crackdown.
Actually, those obstacles did little to keep equity markets
from sailing to record highs across multiple regions on
Thursday. Underpinning markets is a combo of robust earnings, a
dovish Fed and data, such as U.S. GDP, which has been good
enough to keep recovery hopes alive but good enough to hasten
policy tightening talk.
Reassurances from Beijing's regulators and official media
have also helped but not enough to make for a quiet Friday, with
markets having a bit of a wobble. Chinese tech giants such as
Alibaba have dropped about 10%, pushing the Hang Seng
index some 2.5% lower.
U.S. futures paint a similar fate after Amazon's
lower-than-expected revenue doused Wall Street's enthusiasm.
Nasdaq futures are down 1.5%.
European bourses are opening lower too but will today derail
the market's attempt to notch a sixth straight month of gains?
Hopefully now and with the STOXX 600 index up 2.5% in July, it
would take some pretty major selling.
It's a busy day for Europe's banks with BNP Paribas,
UniCredit and BBVA reporting. UniCredit is also
holding exclusive talks with Italy's government over Monte dei
Paschi, bringing Rome's favourite solution for the
troubled Tuscan lender a step closer.
On currency markets, the dollar languishes near a one-month
low and is set for its worst week since May after the Fed pulled
the plug on a month-long rally. And government bonds across the
world are their best monthly performances since at least March
2020.
Eurozone flash inflation numbers will garner attention after
German data on Thursday showed inflation topping 3% and hitting
13-year highs.
Key developments that should provide more direction to markets
on Friday:
-Japan's output, job availability jump but COVID curbs to slow
growth
--German flash GDP Q2
-Euro zone flash HICP July/flash GDP/unemployment
-U.S. core PCE index/Chicago PMI/University of Michigan final
index
-Auctions: U.S. 7-yr notes
-Emerging market central banks: Chile, Colombia, Azerbaijan
-European earnings: UniCredit, Caixabank, Siemens, Merlin,
Linde, Amundi, Renault, Luxottica, BBVA, Eni, BAT, IAG, Natwest,
Erste, Raiffeisen, BNP Paribas, Swiss Re
-U.S. earnings: Caterpillar, Chevron, Lazard, Colgate-Palmolive,
Exxon Mobil, Proctor and Gamble, Goodyear Tyres
(Karin Strohecker)
*****
STOXX 600: SIX STRAIGHT MONTHS OF GAINS AT STAKE (0634 GMT)
The STOXX 600 was set to finish July with a sixth straight
monthly gain but this morning's negative price action might put
that milestone in jeopardy.
The pan-European benchmark is up about 2.5% so far in July
so it would take a really rough session to knock it out of
posititive territory.
"The big question today as we come to month-end is, will the
recovery seen in the past two days be enough to see European
markets post their six successive monthly gains?", asked Michael
Hewson in his morning report for CMC Markets.
The last time the STOXX 600 managed to pull off six monthly
gains in a row was in 2013.
Must be noted that 2021 looks quite good with a 16%
year-to-date gain. If the index manages to retain that gain by
year-end, it would be its third-best performance in the last ten
years.
(Julien Ponthus)
*****
IT'S NOT LOOKING GOOD (0555 GMT)
This morning's batch of earnings doesn't look particularly
bad in Europe but the mood has soured to such an extent in Asia
that there's little chance the STOXX 600 will open in positive
territory.
European futures are down about 0.75% and it's even worse
for the Wall Street derivatives, particularly for the Nasdaq's
which is losing close to 1.5%.
Over in Asian markets, the Hang Seng is retreating about
2.5% with tech giants such as Alibaba losing about
10%.
The market stress over Beijing's regulatory crackdown is
just not going away and the spread of the Delta variant is also
weighing on sentiment.
European bourses might be able to partially weather the
storm coming from the East thanks to the Q2 results which are
gradually being published this morning.
Among the highlights are many top banks such as BNP Paribas
, UniCredit and BBVA.
(Julien Ponthus)
*****
