* European shared down 0.8%
* Smiths gains after $2.7 bln unit sale
* Asian shares mixed, Tokyo up
* U.S. futures lower
Sept 8 - Welcome to the home for real-time coverage of
markets brought to you by Reuters reporters. You can share your
thoughts with us at markets.research@thomsonreuters.com
WHO'S HOLDING THE MEME STOCKS HOT POTATO? (1044 GMT)
Perhaps one of the most amazing thing about the meme stock
trading frenzy that took U.S. stock markets by storm this year
is that the likes of GameStop or AMC haven't (yet?) crashed down
from their highs.
At the time, many seasoned investors warned the Reddit
retail crowd that the party would be over as soon as hedge funds
caught on the wrong side of the trade would unwind their shorts.
Yet, here we are in September and as you can see below, the
share price of AMC and GameStop are up a whopping 2,150% and
956% respectively year-to-date:
Traditional valuation metrics simply don't justify the share
price rise so what's going on?
"Forced buying by index funds may explain the resilience of
the meme stocks, which have not crashed even after the
r/WallStreetBets crowd moved on", writes Vincent Deluard from
StoneX.
In a note in which he looks into the implication and
opportunities from the rise of passive investment, Deluard
argues their rising market capitalisation has forced some buying
from ETFs.
"Troubled movie theater chain AMC entertainment has become
the largest holding of the iShares Russell 2,000 index (IWM) as
its market capitalization soared to $21 billion, five times more
than the smallest stock in the S&P 500 index", he writes.
As a result, "index fund investors may be the left holding
the hot potato of the 'meme stock' mania of 2021", he believes.
Some recent stories on meme stocks:
ANALYSIS-With GameStop earnings on tap, options traders bet
on muted moves
Support.com, other new meme stocks dip, hitting pause in
monster rally
MEME ETF seeks to tap retail investor sentiment
Meme stocks soar in late day trading surge, short sellers
knocked
(Julien Ponthus)
*****
SHARE PLACEMENTS GALORE (0937 GMT)
There seems to be an unusually high number of placements in
Europe driving price moves this morning and on a day when
risk-off is palpable, one may wonder whether time has finally
come to take profit out from this rally before it's too late.
Top victims of so-called accelerated book buildings by
investors selling down their stakes include carmaker Stellantis,
hiring firm Adecco and retailer Asos but traders also point to
pencil maker Fila, tech firm SoftwareONE and packager Vetropack
as coming under pressure as a result of a share placement.
One London-based trader says predictions of a possible
sizeable correction by year-end is hurting markets and then
adds: "There are quite a few placements which I guess can be
expected as many of the shares had a very good run".
All these stocks are down between 1.3% and 6.6% with some of
them featuring among the top fallers on the STOXX 600.
Pierre Veyret, analyst at ActivTrades, says profit taking is
to be expected with benchmarks trading close to record highs but
overall he remains cautiously upbeat.
"These bearish price moves are likely to be short-lived with
the long-term bullish trend for stocks remaining valid as long
as central banks hold off on any tapering," he argues.
(Danilo Masoni)
*****
93% OF THE STOXX IN THE RED (0736 GMT)
With over nine out of each ten stocks on the STOXX 600
posting losses it's clearly a risk off start to the session.
The pan-regional index is down around 1% and absent any
specific news trigger it seems traders are looking to take some
risk off the table ahead of tomorrow's ECB meeting amid concerns
central banks may start to taper their bond purchases.
Very few are the stocks in positive territory. Smiths Group
is a standout gainer after the industrial technology firm sold
its medical unit for $2.7 billion. Its gains highlight perhaps
that in the today's market sellers are being rewarded.
Elsewhere selling pressure made little distinctions. All sub
sectors are in the red with autos and financial services leading
the way, both down around 1.7%.
(Danilo Masoni)
*****
TIME TO JOIN THE GREEN BOND GANG (0653 GMT)
As governments get back to business with debt issuance after
the summer break, there's something notable about this week's
debt sales in Europe -- it's green.
Germany on Wednesday will sell 10-year green bonds, a day
after Spain's debut green bond garnered an impressive 60 billion
euros of demand.
Green debt issuance globally, recently passed $1 trillion
for the first time, with 90% of sovereign issuance coming from
Europe. Britain will sell its first green bond later this month
while the European Union plans its first green issue in October.
A greenium index compiled by UniCredit, has risen to 4 basis
points, its highest level, indicating that demand for green
paper remains strong and investors are willing to pay a premium
to buy green European government debt.
Back to Germany. The benchmark euro zone debt issuer wants
to be the first to establish a green bond yield curve and
Wednesday's issuance takes it a step closer to that goal.
Another market that's seen action this week is Bitcoin. It
seems to have stabilised after a 17% plunge on
Tuesday, the day it become legal lender for the first time in a
sovereign state. However El Salvador's bitcoin adoption was
clouded by the price fall as well as technological glitches and
protests by mistrustful citizens.
Global stock markets too have stablised after Tuesday's wild
swings but growth concerns are weighing, with Asian shares down,
Europe poised to open negative and U.S. equity futures a touch
higher.
Later in the day, watch for U.S. JOLTS job openings data and
a raft of Fed speakers. And on Wall Street, GameStop, the
original 'meme stock,' releases earnings.
Key developments that should provide more direction to
markets on Wednesday:
- UK supermarket Morrisons is talking to its private
equity suitors and the UK Takeover Panel regarding an auction
to settle its future ownership.
- Deutsche Bank, Commerzbank CEOs attend Handelsblatt
conference
- Japan upgrades Q2 GDP on stronger business
spending
- PayPal heats up buy now, pay later race with $2.7 bln
Japan deal
- Interest rate meetings in Canada, Poland, Croatia
- Fed speakers: New York President John Williams 1710 GMT;
Dallas President Robert Kaplan 2200 GMT; Boston Fed President
Eric Rosengren, Minneapolis Fed President Neel Kashkari 1800 GMT
- U.S. auctions 10-year bonds.
- US JOLTS job openings, Initial jobless claims, consumer
credit
(Dhara Ranasinghe)
*****
EUROPE HEADS SOUTH (0620 GMT)
European equities look set to kick off the day just slightly
in the red with futures on top country benchmarks losing as much
as 0.4% at the time of writing.
The mood in Asia wasn't exactly buoyant and although Tokyo
managed to reverse initial losses to extend its recent run
driven by stimulus bets, broader equity gauges were in the red.
Meantime in the U.S. futures pointed to possible gains later
on as investors await indications from Fed speakers about how
Friday's weak jobs report has impacted tapering plans.
In Europe the focus is on the ECB policy meeting on Thursday
where the central bank could unveil plans to slow down its
massive bond purchases.
In corporate news, M&A could help liven up the session.
French drugmaker Sanofi agreed to buy U.S. peer Kadmon in a $1.9
billion deal, while UK tech firm Smiths Group is to sell its
medical unit to UICU Medical for $2.4 billion.
(Danilo Masoni)
*****
