* European shares hit new record high
* STOXX 600 and FTSE 100 up 0.4%
* FOMC minutes send dovish message
* Nasdaq leads U.S. futures higher
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EZ SUMMER TO BE CONFIRMED, BUT CONFIDENCE ON THE RISE (1153
As a third wave of COVID cases has led European governments
to toughen restrictions, investors remain pessimistic on the
prospects for the euro zone economy.
Many analysts have warned of the risks of another lost
summer for EZ countries, as the euro area lags behind the UK
with the vaccine roll-out.
But Goldman Sachs analysts bring a ray of hope saying they
are confident Europe will be able to leave the worst of the
pandemic behind on time for the summer, even if the bankers
expect lockdown to be extended until early May.
"Although the current COVID and activity situation remains
challenging, our confidence is rising that the euro area will
rebound sharply into the summer."
Supporting this thesis, GS mentions a decrease in daily
cases, while the pace of vaccinations has recently stepped up,
putting the inoculation programme in the euro zone "on track to
reach 50% of the population in early July," GS analysts say.
Also supporting the rebound narrative, "March activity
indicators have surprised notably to the upside, with strong
growth in manufacturing and resilience in services, despite the
Strong domestic demand propels German industrial orders
Merkel backs tougher COVID lockdown in Germany
France's COVID-19 hospitalisations near a five-month high
MAKING UP ONE'S MIND ABOUT ASOS (1125 GMT)
Tricky trade this one!
ASOS and its 275% H1 profit jump seemed liked a no-brainer
ahead of the open with pre-market indications seeing the British
online retailer rising 3% to 4%.
The stock did rise around 2% during early trades but quickly
fell 6% from these highs. It has now seemingly stabilized above
5,700 pence and a 1.5% retreat.
Sure, there are some concerns out there about the financial
welfare of its 20-something clientele and e-commerce trends
post-lockdown which can justify some nervousness.
Then again in the grand scheme of things ASOS currently
trades over 50% higher than it did before the pandemic hit so
consolidating on these levels can be seen as quite an
For Chris Beauchamp at IG, the glass is clearly half full.
"ASOS shares remain in the holding pattern seen over the
past two months, hovering in the region of £57 following
first-half results that confirm the strength of the business and
put it in a good position even as the UK economy sees physical
stores reopening", he said.
At its current price ASOS is worth above £5.7 billion, which
is more than a dozen FTSE 100 constituents like supermarket
group Sainsbury's and that's after buying the Topshop, Topman
and Miss Selfridge brands from Philip Green's collapsed Arcadia
group for 265 million pounds.
Noting past profit warnings and stumbles before the 2020
lockdown, Freetrade's analyst Dan Lane admitted that ASOS and
its online peer retailer Boohoo seem well positioned going
"Once the dust settles, ASOS’s high valuation could end up
looking a bit more reasonable as a result", he wrote.
One interesting thought from AJ Bell financial analyst Danni
Hewson looking forward is whether online retailers will see a
dent in profit when customers feel more comfortable in returning
"One helpful trend for the business that may evaporate as we
emerge from lockdown is a lower level of returns – an expensive
and fiddly part of the operation for ASOS – as people have been
reluctant to head to the post office to send back those unwanted
VALUE PICKS FOR A RISING DOLLAR WORLD (1112 GMT)
With the rotation into value plays still underway and the
U.S. dollar on a recovery path from near one-year lows,
stockpickers way well be looking for companies that are
positively exposed to both trends.
Citi, who expects the dollar to rise further this year, has
done the job by screening out some cheap and un-crowded U.S. and
European names that have a significant positive exposure to the
"Value has become more positively exposed to a stronger US
dollar making it the new tailwind, while the impact of interest
rates has begun to wane," they say, adding that "a strong US$ is
a headwind for Growth and Price Momentum".
Sorted by their dollar exposure the top three buy-rated
value stocks that aren't very crowded are Syneos Health
, Aroundtown and Novartis.
Down in the list to reach position No.10 are Continental
and British American Tobacco, DISH Network
, Ahold, Deutsche Wohnen and Vodafone
and Leg Immobilien.
The influence of the dollar has increased significantly.
As you see in this Citi chart, the return correlation has
steadily risen in March to reach the highest level this year.
INSURERS: TAKE A LOOK AT SOLVENCY RATIOS (1033 GMT)
With shares of European insurers trading at a significant
discount to the benchmark Stoxx 600 index, the picture is
getting attractive amid rising solvency ratio estimates.
UBS says estimates for solvency ratio -- a company's ability
to meet its long-term obligations -- for the sector "increased
by +8 ppts on average since FY20 to 199% driven largely by the
increase in interest rates."
This "screens well both for downside protection but also for
potential for upside to dividend/capital return," according to
With the sector trading at a 40% discount to the Eurostoxx,
compared to its historical average of 20%, this higher solvency,
along with macro tailwinds, "means the sector's capital return
screens attractive," they say.
Among single names, UBS says Generali (231%), NN Group
(216%) and Aviva (209%) standout with the highest solvency
Chart below shows European insurer stocks
underperforming the Stoxx 600.
NEW RECORD HIGH FOR STOXX (0847 GMT)
European shares are off to a positive start this morning
with the STOXX 600 making a fresh record high in early deals and
the FTSE 100 hitting its highest in more than a year, helped by
dovish messaging from the Fed minutes.
The pan European benchmark was last up 0.3% while the UK's
top share index added 0.1%, both off initial highs.
"Investors’ risk appetite is on the rise again as the Fed
officials renewed their dovish tone yesterday by announcing that
the massive bond-buying program will continue for 'some time',”
said Pierre Veyret, analyst at ActivTrades.
"The mood has been further strengthened by Janet Yellen
confirming a $2 trillion fiscal aid plan in the US," he added.
In single stocks worth highlighting that telco M&A is back.
KPN shares are rising 2.3% after a media report said private
investors were preparing an attempt to buy the top Dutch
telecoms provider. KPN declined to comment.
KEEP THE FAIT (0709 GMT)
The messages from the Fed's minutes could not be clearer.
First, despite the blowout March payrolls report, labour markets
are nowhere near its threshold for reining in easy monetary
policy. And the Fed aims to let inflation average 2% for some
time before contemplating any tightening.
In short: FAIT or flexible average inflation targeting.
The message seems to have sunk in - 10-year Treasury yields
are some 10 basis points off recent highs, a spike in
short-dated yields has abated and some of the most aggressive
pricing of Fed rate hikes has been scaled back.
Markets will await Fed Chair Jay Powell's appearance at the
IMF spring meetings but the minutes have lifted U.S. equity
futures half a percent, following Wednesday's records on Wall
Street. European stocks are opening higher too, with the UK's
FTSE looking to extend its Wednesday run to record highs.
On the economy front, strong German domestic demand lifted
industrial orders for the second straight month, hot on the
heels of this week's PMI revisions that showed euro zone
business activity back in growth.
The fly -- (or the virus) -- in the ointment is of course
COVID-19 with infections surging in India, Tokyo set for
emergency measures and some evidence of blood clots linked to
the Astra Zeneca vaccine.
Key developments that should provide more direction to
markets on Thursday:
- Corporates: Holland-based Prosus sold 2% of
Chinese gaming giant Tencent for $14.7 billion in the
largest-ever block trade; Clothing retailers Asos and Uniqlo
reported robust profits, the former seeing an astonishing 275%
- Japan's consumer confidence improved in March.
- G20 finance officials to debate President Joe Biden's
minimum corporate tax plan
- Data: Euro zone, UK construction PMI; Euro zone PPI Feb;
U.S. weekly jobless numbers
- IMF/World Bank Spring Meetings: World Bank head Kristalina
Georgieva, Fed Chairman Powell, and WTO Director General Ngozi
Okonjo-Iweala to speak
- ECB: Vice President Luis de Guindos speaks
- Emerging markets: Peru, Sri Lanka central bank meetings
EUROPEAN BOURSES SEEN ON THE BLACK AFTER FED MINUTES (0535
In a data heavy morning, European shares are seen in the
black this morning after the Fed renewed its commitment to
keeping policy super loose even as the U.S. economy enjoys a
Fed remains wary about the ongoing risks of the pandemic and
is committed to bolstering the economy until its recovery is
more secure, according to minutes of the U.S. central bank’s
latest policy meeting.
U.S. stock futures just hit fresh record highs, while
European futures are also in positive territory.
Eyes will also be on PMI figures for the UK and the EZ,
which are due this morning.
Financial spreadbetters at IG expect London's FTSE to open
23 points higher at 6,909, Frankfurt's DAX to open 62 points
higher at 15,239 and Paris' CAC to open 27 points higher at