* Nasdaq, S&P rise, Dow slips; small caps outperform
* Cons disc leads S&P sector gainers; utilities weakest
group
* STOXX 600 index down 0.2%
* Dollar ~flat; gold ~flat, NYMEX crude up
* US 10-Year Treasury yield ~1.17%
Jan 12 - 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
AGGRESSIVE SPECULATIVE FEVER (0954 EST/1454 GMT)
When the largest stock in the U.S. small cap index Russell
2000 is worth close to $30 billion, it's hard to avoid the
"bubble" talk. And, quite rightly a piece of news this afternoon
from Renault and Plug Power sums up the
euphoria in green stocks.
Fuel cell maker Plug Power's shares are soaring 13% in U.S.
premarket trade, after it signed a hydrogen-powered light
commercial vehicle joint venture with Renault. The French
carmaker was up a modest 1.4%.
The jump in Plug Power takes it's 52 week gains to a
whopping 1,220% -- some of the latest action in the stock came
after Biden was elected U.S. president as investors expect the
new administration to spend more on infrastructure and support
green energy.
Plug is not alone, another company in this space, Fuelcell
Energy has surged 600% since the election in November. Both are
yet to make profits and analysts don't see them making money
until at least 2022.
Strange isn't it? Agreed, green revolution is in its early
phase, but such unreasonable valuations are baffling some
investors. Pointing to today's news on Renault-Plug, one
Germany-based trader said "the way this news is traded is
obviously completely wrong".
The market cap jump in Plug Power today alone is 1/3 the
size of Renault -- a company that's been profitable for several
years. Investment bank Saxo recently described this as
"aggressive speculative fever in technology and green stocks".
A similar trend is observed in Sunrun -- a provider of
residential solar panels and home batteries -- which has jumped
541% in the last 1 year and is worth $19 billion with a
valuation of 198 times 12-month forward earnings.
And then there is an entirely illogical trade such as Signal
Advance where a stock, OTC traded, has no full-time
employees, and has been scaling 1,000% intraday highs everyday.
- LIVE MARKETS-Itchy fingers: Fangdd to Signal, a retail
mania like no other?
(Thyagaraju Adinarayan)
*****
EUROPEAN BANKS: STILL CHEAP? (0915 EST/1415 GMT)
In the last few days, as U.S. rate expectations have
improved, markets have been more optimistic on the potential for
reflation, bolstering European bank share prices.
The outlook remains positive in 2021, says Barclays.
The European banking sector is trading at 0.7X 2020E TNAFF,
whilst it is not as "cheap" as we saw in Q320 and early Q420,
but it is still "not overly demanding", Barclays says.
Here is a snapshot of the monthly performance of European
banks:
The UK bank expects earnings growth, earnings upgrades in
aggregate and increasing capital return to compensate for the
higher valuations in the sector.
It could trade to 0.8-0.9x TNAFF later on, "although at that
point it may start looking less attractive to us," Barclays
says.
Looking ahead, much of the journey for European banks will
depend on effectiveness of the COVID-19 vaccine roll out. The
impact of the third lockdown in the UK presents "additional
near-term challenges to revenues, and hence consensus estimates
in 2021," it adds.
On a brighter note, Barclays looks for a consumer-led
rebound in Britain to support banks in the second half of the
year.
Lloyds, ABN and Santander are
Barclays' preferred names.
(Joice Alves)
*****
S&P 500: DOES IT HAVE THE LEGS TO CONTINUE ITS CLIMB? (0900
EST/1400 GMT)
The S&P 500 index has mounted an impressive advance
from its March 2020 low. That said, the benchmark index is
nearing another significant resistance hurdle, amid a protracted
monthly momentum divergence. (Click on chart below)
On a closing basis, in the 203 trading days since its March
trough, the SPX has posted a gain of about 70%. That's its
biggest rolling 203 trading-day rise since in 1933-1934, amid
the Great Depression.
Despite the stellar rise, monthly momentum is lagging. Since
registering an all-time high in early 2018, the RSI has been
making lower highs. Of note, just since 2007, SPX declines of
varying degree were preceded by monthly momentum divergence.
Meanwhile, the SPX faces a monthly channel resistance line
from its 2010 high which resides around 3,905 this January. This
line is only around 2% above last Friday's 3,826.69 high.
(Terence Gabriel)
*****
FOR TUESDAY'S LIVE MARKETS' POSTS PRIOR TO 0900 EST/1400 GMT
- CLICK HERE:
(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)
Lloyds (LLOY)
