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DAX HITS NEW HIGH, TELCOS FLOP (0731 GMT)
Sentiment has definitely switched to risk-on this morning
with Germany's DAX hitting a new record of 15,538 points and
leading European benchmarks with a 0.8% rise.
The STOXX is up 0.7%, but that's just not quite enough to
bring it above its May 10 record high of 446.2 points.
Telcos are at the centre of the market price action with
Vodafone and Iliad losing a whopping 6.2% and 7.9% respectively
after both companies published disappointing Q1 updates.
The sector, unsurprisingly is the worst performer in Europe
this morning being the only one in the red with a 0.8% fall.
The rest of the stock market is in a bullish mood with
cyclicals leading the way. Miners, media, oil and gas, travel
and leisure and car makers are all up over 1.2%.
Among individual stocks shining is hearing aid maker Sonova,
up close to 10% after it said it expected strong growth this
year thanks to a wave of pent-up demand after the coronavirus
pandemic.
(Julien Ponthus)
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MARKET LOOKS ON THE BRIGHT SIDE (0705 GMT)
Risk-on, risk-off. The pendulum today is swinging towards
the former after the VIX volatility gauge closed under 20, the
dollar index is at six-day lows and strong gains across Asian
stock markets set the stage for brighter sessions in Europe and
the United States.
Markets seem inclined to focus on the positives today --
Japanese stock markets focused on solid earnings to rise as much
as 2.2%, despite data showing Q1 economic growth declined an
annualised 5.1% and chip shortages crimped export growth.
They are also disregarding inflation fears for now -- a
survey for New York state, the Empire State, showed a
"prices-paid" index at record 83.5, adding to signs that
inflation expectations among consumers and businesses are on the
rise.
They are looking past comments by the Dallas Fed's hawkish
Robert Kaplan who argued it would be "healthy" to start
discussing the timing of a stimulus taper. Instead they appear
to have been placated by Vice-Chair Richard Clarida, who pointed
to the weak April jobs report as proof of the slack in the
economy.
The selloff on euro zone bond markets too has calmed and the
wait is on for the "flash", or first-estimate GDP reading that
is predicted to show the economy shrinking 1.8% year-on-year.
On the companies front, the fag end of the earnings season
brought some bad news from Vodafone which missed Q1 earnings
expectations. Real estate firm Land Securities too saw full-year
losses widen by over 500 million pounds as the pandemic battered
its London office portfolio.
Key developments that should provide more direction to markets
on Tuesday:
-Britain's unemployment rate fell again to 4.8% in Q1
despite lockdowns and hiring rose further in April
-Euro zone employment, flash Q1 GDP
-BoE senior regulator Sarah Breeden speaks
-Fed minutes 1800 GMT
-Auctions: UK 20Y, US 12-mth t-bills
-Federal Reserve speakers: Atlanta Fed President Raphael
Bostic and Dallas Fed President Robert Kaplan 1500 GMT
-U.S. earnings: Macy's, Wal
-Mart, Home Depot, Baidu
(Sujata Rao)
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NEW RECORD WITHIN REACH AT THE OPEN (0533 GMT)
Juts like yesterday, Europe's STOXX 600 is in striking
distance of a new record high this morning.
It would only take about 0.9% for the pan-European index to
go beyond the 446.2 high touched on May 10.
Futures are rising just below that speed at the moment so
whether this session hits another milestone is anyone's guess.
But there's favourable wind coming from Asia where MSCI's
index of Asia-Pacific shares outside Japan rose
1.5% while the Nikkei jumped 2.3% on solid earnings
reports.
Wall Street futures are looking good after a disappointing
session, up about 0.3% for the S&P 500 and 0.5% for the Nasdaq.
Among the data that could make a difference this morning
we'll get the euro zone's flash GDP Q1 and results from
Vodafone, Imperial Brands and Generali among others.
(Julien Ponthus)
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