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* STOXX 600 up almost 1%
* Europe's healthcare stocks lead gains
* US futures higher, Nasdaq up 3.1%
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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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