Last checked at 
* European shares recover: STOXX 600 up 0.3%
* Healthcare stocks lead gains in Europe, banks down
* U.S. futures higher, Nasdaq up 1.8%
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A DIVIDED U.S. ADMINISTRATION? WE CAN COPE WITH IT (1046 GMT)
Financial markets' volatility is expected to stay high until the outcome of
U.S. elections is clear as investors worry more about uncertainty than about a
divided administration.
"The real outlier may in fact be the unclear, disputed election, hanging in
the courts for multiple weeks," according to Jefferies.
"The Bush-Gore saga saw markets sell off by 8% until resolved," a Jefferies
research note recalls.
But a divided administration, such as Joe Biden president with a Republican
Senate or Donald Trump with a Democratic Senate, shouldn’t weigh on financial
markets.
The U.S. “has regularly faced this kind of situation,” it adds.
“Tweets might be dialled up or down, bipartisanship easier or harder to
achieve, and the pace of reform on healthcare, renewables and taxation
accelerated or slowed, but fundamentally these are outcomes which likely leave
the market broadly calm.”
(Stefano Rebaudo)
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BRACE FOR A BUMPY RIDE (0938 GMT)
Let’s face it, volatility could stay high at least until the outcome of U.S.
presidential elections is clear and this could take some time.
Barclays which had already warned about a delayed outcome announcement, says
that “uncertainty could persist for an extended period of time, similar to 2000,
and increases the possibility the result will be challenged.”
“Recent rotation, which saw bond yields rising and value outperforming along
with emerging markets could be halted for now,” a Barclays note says.
“Prolonged uncertainty and a legal dispute could be a short-term negative
for risk assets, in our opinion, although they may not come as a complete
surprise,” it adds.
(Stefano Rebaudo)
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OPENING SNAPSHOT: BIDEN BETS UNWINDING (0830 GMT)
Growing uncertainty surrounding the U.S. elections' outcome has resulted in
a clear risk-off start in Europe with many Biden bets unwinding as the prospect
of a blue wave evaporated overnight as Trump did better than expected by the
polls.
The STOXX 600 is down 0.4% in early deals, even though losses are not as
pronounced as those recorded earlier by index futures after Trump claimed that
he had won the U.S. election even though millions of votes were still uncounted.
Banks and autos are the leading sectoral fallers while
stocks such as wind turbine makers Vestas and Siemens Gamesa
or Heidelberg Cement, seen as winners under a Democrat policy change
in the US, are posting heavy losses.
Healthcare and tech are both outperforming.
(Danilo Masoni)
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ON OUR RADAR: NO REFLATION TRADE FOR TODAY (0727 GMT)
The U.S. election is too close to call at the moment and after yesterday's
reflationary binge it now looks markets may have to deal without that type of
trade as investors price out the chances of a clear cut Biden win over Trump.
As a result banks could come under pressure after a two-day rally and Europe
as a whole could underperform tech-heavy Wall Street, given its higher gearing
towards banks and value stocks.
No surprise then that early indications show European futures falling
whereas Nasdaq futures are up around 2%.
"Well there is some unwinding of yesterday’s quite full-on pro-reflation
trade meaning that bond yields are falling and tech heavy indices are leading...
European and Asian markets are relatively muted in the wider scheme of things,"
says Chris Bailey, European strategist at Raymond James in London.
And Ian Williams, economics & strategy research analyst at Peel Hunt adds:
"The 'Democratic sweep' thesis now appears dead, so the immediate market impact
is likely be lower Treasury yields, and for equity market leadership to remain
with quality growth rather than cyclical value."
Besides that there are some earnings updates to watch.
France's second-biggest listed bank Credit Agricole reported an
18.5% drop in Q3 profit, in line with expectations, as strong results in capital
market activities helped soften a blow from bad loans provisions.
BMW said Q3 profit rose almost 10% thanks to rebounding Chinese
demand for luxury cars and it reiterated its outlook, even as a wave of
coronavirus infections continues to sweep Europe and the United States. Its
shares fell 3.5% in early trade.
Zalando shares were up over 1% in premarket trade after the German
online fashion retailer said it was well prepared for a second coronavirus wave
after it reported better-than-expected profitability due to an "exceptionally"
strong spring and summer season.
Phone tower operator Cellnex said it was considering up to 11
billion euros worth of potential investments and confirmed it expects its bottom
line to remain negative in the coming quarters even as core earnings rise.
Meantime in the UK, retailer Marks & Spencer on slumped to a H1
loss, the first in its 94 years as a publicly listed company, after clothing
sales were hammered by the COVID-19 pandemic.
(Danilo Masoni)
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EUROPE WAKES UP WITH U.S. ELECTION DOUBTS (0622 GMT)
European stock futures aren't in great shape this morning as hopes of a
clear-cut Biden victory in the U.S. presidential elections faded overnight with
Trump doing better than expected by the polls, possibly paving the way for a
contested election.
Trump took the lead over Biden in the vital battleground of Florida and
other U.S. swing states, but Biden pinned his White House hopes on Arizona and a
"blue wall" of three Rust Belt states that could take days to count their votes.
European stock futures underperformed U.S. ones but trading remained pretty
volatile, reflecting growing uncertainty.
EuroSTOXX 50 futures were last down 0.2%, DAX futures were
flat and FTSE futures added 0.2%.
A Biden win is viewed as potentially underpinning European equities because
of expectations of a bigger stimulus package and better trade relations with
Washington.
(Danilo Masoni)
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