LIVE MARKETS-Bulls go defensive

* European shares flat

* FTSE down as British economy reopens

* Shares in Diploma jump on positive FY outlook
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BULLS GO DEFENSIVE (0928 GMT)

The idea that a correction has become more likely is gaining
traction even among the bulls but that doesn't necessarily mean
it's time to say goodbye to the rotation trade.

JPMorgan believes investors should position defensively for
the time being but be prepared to jump back into cyclical and
value plays later on this year.

"Within the market, our tactical call remains that
traditional Defensive sectors are the good place to be in during
this phase, against the manufacturing cyclicals – semis, autos,
cap goods and other – and note better recent trading of a number
of defensives – staples, healthcare and telecoms," say
strategists at the U.S. bank led by Mislav Matejka.

"We are staying cautious on tech and positive on banks,
though, as investors negotiate both the unwind of complacency
and the peaking in activity momentum, but also the elevated
tapering fears, which prevents long duration growth sectors from
being a safe haven," they add.

All in all, JPM expects the current consolidation to last
perhaps 1-3 months and will provide a "great entry point" for
the next leg higher.

Charted below the YTD performances of Europe's STOXX
sectors.

(Danilo Masoni)

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CUDDLE CAUTIOUSLY (0854 GMT)

As of today, most of Britain will be free once again to
drink a pint in pubs, sit down to an indoor meal or visit the
cinema as the third national lockdown, which imposed the
strictest restrictions in peacetime history, comes to an end.

One would expect at least some sort of contentment in the
FTSE 350 travel and leisure index, instead it's
down around 1%.

Even the PM urged people to cuddle and party cautiously,
while British businesses ramped up their search for new staff
for pubs, restaurants and other hospitality and travel firms.

But all of this is failing to impress equity investors:
shares in pubs and restaurants operators Mitchells & Butlers
, JD Wetherspoon, Restaurant Group,
Whitbread are all falling between 1% and 2%.

Shares in SSP Group --which sells food and beverage
to restaurants, bars, cafes, food courts, lounges and stores in
airports and train stations-- are down almost 4%.

The easing of lockdown measures is seen as the real test
for reopening trades, which have performed well this year, with
the FTSE 350 travel and leisure index gaining a whopping 50%
since an effective vaccine was first announced in November.

"Reopening day in Britain – today is a big step forward for
the economy, not so big for the stock market," says Neil Wilson
at Markets.com.

The questions for policymakers and investors, he continues,
are "do people get out and spend, do they take on more debt and
do banks lend more?"

(Joice Alves)

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MIXED FEELINGS AT THE OPEN (0738 GMT)

There's limited data or corporate earnings to gnaw on this
morning and as a result, not much traction either way on
European bourses.

The STOXX 600 is perfectly flat and the jury is clearly
still out on how this season will end up panning out.

Moves are quite limited across sectors too with the biggest
rise going for telcos and autos, up around 0.8% and the
strongest loss for travel and leisure, down 0.9%.

Among individual stocks the top gainer is Diploma, up 6%
with results beating expectations.

(Julien Ponthus)

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IS THE 'MISERY INDEX' COMING BACK? (0709 GMT)

Higher inflation that forces the Federal Reserve to 'taper'
its asset purchases has concerned investors of late but that
worry came, at least, with the promise of strong economic
growth.

Now though, the question could be whether recent poor jobs
data and a surge in consumer prices bring back talk of the
'misery index', a gauge crafted by Republicans in the 1970s to
describe the combo of rising prices and high unemployment
.

Globally too, the picture is getting worrying, with supply
chain bottlenecks and raw materials costs weighing on production
and cooling the blistering economic recovery after last year's
slump. Data on Monday showed output slowed at Chinese factories
in April while retail sales underwhelmed.

Japan's wholesale prices meanwhile rose in April at their
fastest annual pace in six-and-a-half years, lifted by energy
and commodities costs.

And then there is COVID-19. Leaving aside the disaster in
India, coronavirus is hitting hard across Asia, with Singapore
shutting most schools from Wednesday and Taiwan's infection
spike sending shares another 3% lower.

That forced the government to pledge it would stabilise
stock and currency markets if needed.

For global equityies, visibility is getting murky, though
they are still basking in the afterglow of record shattering
first quarter results. MSCI's Asian ex-Japan shares
ticked up 0.1%, European futures were mixed and
Wall Street peers slightly negative.

M&A is a force to be reckoned with however -- telecoms giant
AT&T Inc is nearing a deal to combine its media assets,
including CNN and HBO, with Discovery Inc, the owner of
lifestyle TV networks such as HGTV and TLC. The new company may
be valued at $150 billion

Finally, Bitcoin fell 12% over the weekend to its lowest
since February after tweets from Elon Musk hinted that Tesla may
have sold, or will sell, its holdings.

Key developments that should provide more direction to
markets on Monday:

- British house prices have risen further over the past
month, property website Rightmove said.

Ryanair reported a record annual after-tax loss of 815
million euros ($989 million)

- Speeches by Bank of England's Andy Haldane, Gertjan
Vlieghe

- Federal Reserve: Atlanta Fed President Raphael Bostic,
Fed vice Chair Richard Clarida and Dallas Fed President Robert
Kaplan

(Julien Ponthus)

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EUROPE'S RECORD HIGHS BACK IN SIGHT (0525 GMT)

European bourses are set to open slightly higher and given
Friday's advance, new record highs are not that far away for
European equities.

The STOXX 600 closed at 442.5 points last week and is just
0.8% away from its 446.2 record touched on May 10.

There's little traction coming from the East with MSCI's
broadest index of Asia-Pacific shares outside Japan
being perfectly flat.

Wall Street futures are also slightly down, exposing a
cautious mood while there's little to expect in terms of
corporate earnings earnings or macro indicators.

(Julien Ponthus)

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