SSE Share News (SSE)

* STOXX flat in choppy session

* Banks underperform

* Wall Street futures lower

* Oil steady ahead of OPEC+

* China's Evergrande to raise $5 bln from property unit

Oct 4 - 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

WHAT NORMALISATION? (1041 GMT)

There seems to be a broad agreement that we've past 'peak growth' in this post-COVID 19
crash recovery cycle but it's pretty hard to define what's next.

"We cannot call what we are going through a 'normalisation'", argues Vincent Manuel, CIO at
Indosuez Wealth Management.

Indeed, for what we can imagine of 2022, it sure doesn't look like 2019, particularly when
it comes to inflation.

Manuel points out that economic growth is still running well above historical average and
monetary policy, even if it's tightened, will still be light years away from what it was before
the pandemic.

While policy makers had a clear idea of what to do when markets collapsed in March 2020, the
exit strategy is murky at best.

"The risk is that the governments’ and central banks' toolbox, which worked so well to get
out of this self-inflicted recession, could prove ineffective when it comes to optimising the
growth/inflation mix", he also writes.

Some things don't change hopefully for investors and that's good old 'Tina' and the lack of
alternative to stocks.

"As long as earnings expectations remain robust and interest rates close to the low path of
the range, the relative valuation of equity reinforces the TINA rhetoric and should continue to
drive regular inflows on the market".

Indosuez Wealth Management are quite upbeat for "cheap" European stocks, noting positive
earnings expectations, the good vaccination rate and the boost provided by the EU recovery fund.

(Julien Ponthus)

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HERE'S YOUR MONDAY DOSE OF VALUE BULLISHNESS (0936 GMT)

There's barely no day that goes by without another broker piling in with yet one more upbeat
view on value, as rising yields suggest the space has catch-up potential.

Delivering the Monday dose of value bullishness is Goldman Sachs.

"Value still looks exceptionally cheap vs. Growth and we think this provides pockets of
opportunities for investors. That does not mean that the rotation into Value will be persistent
or long-lasting but we do think the current rotation will go further," GS says in its European
express note.

Goldman is overweight on energy and banks.

(Danilo Masoni)

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UTILITIES: WHY THEY UNDERPERFORM (0859 GMT)

Higher energy prices are usually good for utility stocks. This is the general idea, but
there are a couple of things we should consider.

As BofA analysts put it, utilities might become victims of their own success as they face
two challenges.

“Firstly, they are mostly hedged (against volatility in energy prices) for 2022 and
partially for 2023, limiting their ability to capture higher prices in the near term,” they say.

“Secondly, they are vulnerable to imposition of windfall taxes by governments seeking to
avoid higher wholesale costs impacting voters' pockets,” they add.

So BofA looks at utility stocks, country by country.

In Germany, there is the lowest risk of adverse intervention that could negatively impact
E.On, RWE, Uniper.

France might face a temporary freeze with companies being asked to postpone tariff increases
until after the presidential elections in April 2022.

The UK government's silence on energy bills creates uncertainty for UK-exposed utilities
such as Centrica, SSE, Orsted, EDF and RWE.

Italy and Spain will probably see measures to cut consumer prices at utilities' expense.

The chart below shows the European utility stock index underperforming the oil and
gas index and the Stoxx 600.

(Stefano Rebaudo)

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RED IT IS! (0750 GMT)

There seems to have been quite a while of soul searching this morning but the direction of
travel now seems pretty well set: it's down!

The pan-European STOXX 600 is losing about 0.5% at the moment and only two defensive
sectors, healthcare and food and beverages are making timid gains.

All other sectors are losing some ground, starting with banks which are down about 1.5%.

Same goes for national bourses which are overwhelmingly in the red, at the exception of
Madrid's IBEX which is flat.

In terms of individual stocks, BT is a top faller after a media report said pay-TV group Sky
was set to back Virgin Media O2's fibre rollout.

Another big mover in London was supermarket Morrison down 3.7% after CDR won the auction
with a 7 billion pound bid.

Looking ahead, Wall Street futures are also in the red, particularly for the Nasdaq, down
0.7%.

(Julien Ponthus)

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EMERGING BRITAIN (0655 GMT)

As the Northern hemisphere autumn gets going, there is but one colour -- green.

The dollar is trading just below one-year highs against a basket of currencies and is
heading for its best year since 2015. Speculators are piling in -- latest data shows "long"
dollar positioning at the highest since March 2020.

A hawkish Federal Reserve, higher Treasury yields and jitters over the U.S. debt ceiling
battle are all combining to drive the greenback higher.

A rising dollar is typically a sombre omen for markets and perhaps unsurprisingly, its
four-week streak of strength coincided with world stocks snapping a seven-month run of gains in
September. Dollar strength also usually spells bad news for emerging markets, which had a pretty
poor September.

Speaking of which, some strategists are starting to wonder if Britain's pound isn't behaving
like one. (Full Story)

Why? In a nutshell, it's that feeling when you realise rising interest rates may not lift
your currency much and investors flee bond markets rather than flock to it.

Markets have brought forward expectations for the Bank of England to raise rates but that
has so far failed to prop up sterling which hit its lowest levels of the year last week.

Sterling is being hit by a storm of supply shortages, surging energy prices and of course
dollar strength.

Doubts about the government's economic strategy are running high as Prime Minister Boris
Johnson admits a "period of adjustment" is needed. And some pundits are warning of 1970s-style
"winter of discontent". (Full Story)

Currency traders now await Friday's September nonfarm numbers, which could encourage the Fed
to proceed with unwinding stimulus. As for today, those fretting about crude prices at $80 a
barrel will watch today's OPEC+ oil producers' meeting.

Asian bourses started the week slightly lower while shares of debt-laden China Evergrande
3333.HK were suspended after it missed another interest payment.

Stocks futures point to a weaker session in Europe and on Wall Street.
Key developments that should provide more direction to markets on Monday:
-- OPEC meets on output increase as oil prices rally (Full Story)
--CD&R wins $10 bln auction for UK supermarket Morrisons (Full Story)
-- Euro zone finance ministers to discuss EU recovery plans
-- Fed speakers: Boston interim President Kenneth Montgomery, St Louis Fed’s James Bullard,
-- US durable goods, factory orders

(Julien Ponthus)

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UNCERTAIN FUTURES (0635 GMT)

Futures for European stocks have been wobbling between negative and positive territory for
the past hour and it's yet uncertain if they will settle in the black.

The mood seems a tad darker on Wall Street with S&P 500 e-minis down 0.3% and Nasdaq 100
e-minis losing 0.5%.

The session wasn't exactly upbeat in Asia with MSCI's broadest index of Asia-Pacific shares
outside Japan dipping 0.1%.

Adding to the gloom, trading of debt-laden China Evergrande was suspended pending an
announcement about a major transaction.

Chinese media said the distressed developer would sell a half-stake in its property
management unit to Hopson Development for more than $5 billion.

Oil fell on Monday ahead of an OPEC+ meeting which may determine whether the recent rally in
prices will be sustained.

In terms of individual stocks, all eyes will be on the British retail sectors after CD&R won
the auction for Morrisons with a 7 billion pound bid.

(Julien Ponthus)

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