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BIDEN'S INFRASTRUCTURE PLAN: WHO WINS IN EUROPE? (0942 GMT)
News of Biden's infrastructure deal sure lifted Wall Street
last night but it's fair to say that it's not doing much for
European equities this morning with the STOXX 600 struggling to
keep its head out of the water.
But further down the road, there are a few European groups
which could benefit from the hundreds of billions of extra
spending, Citi analysts reckon.
"The key Buy-rated winners in our sector from the deal as
proposed are 'hard' infrastructure plays, such as Volvo, Metso
Outotec, Alstom and Prysmian", they write in a note published
this morning.
Other possible winners according to Citi include Rotork in
water infrastructure and Siemens Energy through grid
investments.
(Julien Ponthus)
*****
HOW TO GET IMMUNITY FROM MARKET SHOCKS AND VIRUS(0856 GMT)
If stocks with low-risk and high-growth existed, it's an
easy pick for investors in any kind of economic environment.
Saxo Bank says cybersecurity ticks those boxes and is probably
the only sector strongly displaying both defensive and growth
characteristics.
"The underlying demand function is stable throughout the
economic cycle and the increased number of cyber attacks have
increased the awareness and need for massive investments,"
Peter Garnry, head of equity strategy at Saxo Bank says.
With the most recent high-profile attack being on a major
U.S. pipeline, cyber security has become a necessity for the
corporate sector and governments around the world.
Saxo estimates the industry growing at 11% until 2028,
naming Palo Alto, Crowdstrike, Zscaler,
Fireeye, Avast and 20 other companies having
potential to outperform broader markets.
Notably, only three of the twenty-five companies it listed
were non-U.S. companies. But there is no argument about how
important this industry is with the world heading further
towards digitisation.
UBS said recently that the size of the global cybersecurity
market was some $148 billion last year, growing at 8% annually
in recent years and is set to accelerate to at least 10%.
(Thyagaraju Adinarayan)
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NO FIREWORKS AT THE OPEN (0726 GMT)
Futures lost most of their thrust in the last hour and the
open is weaker than expected given that Wall Street hit new
records yesterday.
The STOXX 600 is flat and Germany's DAX is slightly red.
London's FTSE 100 and Milan's FTSE MIB on the other hand are
up around of 0.2%.
One upbeat area is the sportswear segment boosted by Nike's
after-hours surge in the U.S. based thanks to an upbeat set of
results.
Among Europe's top 50 blue chips, Germany's Adidas is
leading the way with a 4% rise. Puma is also doing quite well,
up 2.8%. In the UK, JD Sports is the top performer, up 4.1%.
Unsurprisingly, retail is the hottest sector with a 0.6%
rise.
At the other end, autos are down 1%.
(Julien Ponthus)
*****
A NEW DEAL AND THE INFLATION BLUES (0649 GMT)
As a U.S. bipartisan Senate infrastructure deal cheers world
markets towards record highs, only a nasty surprise from a key
U.S. inflation reading on Friday could prevent smooth sailing
into the weekend.
The core personal consumption expenditures index, an
inflation gauge tracked closely by the Federal Reserve, is
expected to post year-on-year gains of 3.4%.
That would be a rise even faster than the nearly
three-decade high pace of 3.1% recorded last month and though
Fed officials have gone to great lengths this week to point that
price pressures remain transitory, bond markets will be on guard
for a bigger increase. The data is due at 1230 GMT.
A significant global bond market correction is likely in
the next three months as central bankers eye the exit door from
pandemic emergency policy, a latest Reuters poll finds.
Meanwhile, a fresh U.S. stimulus deal should support
sentiment in world stock markets.
Bipartisan agreement of a $579 billion infrastructure bill,
is less than the Democrats would have liked but is a "decent
addition" to recent stimulus packages, analysts reckon.
Investors appear to agree -- U.S. stocks hit fresh record
highs on Thursday, lifting Asian equity markets on Friday.
European and U.S. stock futures are higher too.
Coronavirus meanwhile remained in the spotlight with
downtown Sydney and the city's eastern suburbs, to go into a one
week lockdown from midnight Friday as authorities struggle to
contain a spike in the highly contagious Delta COVID-19 virus
variant.
Ride-hailing giant Didi Chuxing is also in focus as it aims
for a valuation of over $60 billion in its New York listing,
less than initially expected due to worries about its growth
prospects, according to sources.
The world's largest mobility-technology platform plans to
start trading in New York on Wednesday after a short roadshow
for investors for its keenly awaited initial public offering.
Key developments that should provide more direction to
markets on Friday:
- Shareholders at crisis-ridden Toshiba Corp vote out its
board chairman
- Panasonic sells its stake in electric car maker Tesla
for about $3.61 billion.
- Mexico hikes its key interest rate by 25 bps to 4.25%.
- UK GfK consumer confidence for June holds at 14-month
high.
- U.S. Michigan June sentiment final.
(Dhara Ranasinghe)
*****
SOME TAILWIND FROM BIDEN'S INFRASTRUCTURE DEAL (0529 GMT)
European shares look set to rise gently at the open, lifted
by a breeze of optimism coming from Wall Street which hit record
highs yesterday after Joe Biden embraced a bipartisan
infrastructure deal.
Inflation data in the U.S. will nevertheless be closely
watched to see how credible the Fed's narrative about a
temporary spike really is.
Talking about record highs, the STOXX 600 is only 0.75% away
from a new benchmark.
That said, futures are currently trading below the pace
required at about 0.2%.
After a strong session on Thursday, travel and leisure
shares seem set to benefit from Britain planning to allow fully
vaccinated people to travel unrestricted to all countries except
those with the highest COVID-19 risk.
(Julien Ponthus)
*****
Rotork (ROR)
