* Nasdaq, S&P rise, Dow slips; small caps outperform
* Cons disc leads S&P sector gainers; utilities weakest
group
* STOXX 600 index ~flat
* 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
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)
