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INDECISION AT THE OPEN (0820 GMT)
Where to go from here?
Markets still don't seem to have the answer to that one and
the STOXX 600 is broadly flat, losing a meagre 0.03% ten minutes
after the open.
Vaccine, stimulus and Brexit hopes are not triggering any
particular moves today.
Sentiment looks to be slightly negative though with
cyclicals such as banks, oil and gas and insurers leading losers
with these sectors down 1%, 0.8% and 0.7% respectively.
The consensual tech sector is making the most gains, but
with a timid 0.4% rise.
Among big movers, airline SAS is down 7% after its
trading update. Orange Belgium is up 35% after its
mothership Orange announced a 22 euro-per-share bid
for the shares it does not already own.
The biggest gainer on the STOXX is Rolls Royce, up 4%
after a report it is considering a possible re-entry into the
narrow-body jetliner market.
(Julien Ponthus)
*****
REFLATION! (0755 GMT)
Will the U.S. hiring slowdown displayed in Wednesday's ADP
data and the lacklustre Beige Book activity index pressure
Congress into agreeing additional fiscal stimulus? That's what
markets seem to expect.
That, alongside progress on coronavirus vaccines and
evidence of a Chinese growth bounceback are spurring an epic
reflation trade -- world stocks at new all-time highs and the
S&P 500 posting another record close. The mood is calmer on
European and U.S. equity futures but the commodity complex is
helping -- record high iron ore futures are lifting miners'
shares such as Rio Tinto and BHP.
Reflation bets are in full swing on bond markets too --
two-year/10-year Treasury yield curve have climbed to the
steepest since Feb. 2018 and inflation-adjusted yields too have
steadily risen. And with the dollar index at 2-1/2 year lows,
commodity- and growth-driven Aussie dollar, Norwegian crown and
emerging currencies are benefiting.
It all puts extra focus on what the U.S. Fed and the ECB
might do about all this. Expectations are building the Fed will
move to tamp down longer-dated yield and while the ECB has
already as good as promised to expand bond buying, could it do
more, given the euro has hit the highest since April 2018.
And more M&A -- French telco Orange plans a bid for shares
in Orange Belgium, in an offer worth around 620
million euros. It has offered a 35.6% premium to the Dec. 2
closing price. Italy's Creval holds a board meeting as it tries
to extract a higher offer price from suitor Credit Agricole.
Key events that should provide more direction to markets:
-Final November services and composite PMIs
-Weekly U.S. jobless claims
-Meeting of OPEC+ on next year's oil output policy; expected
to roll over output cuts until end-March
-ECB Board member Andrea Enria speaks at the FT online
Banking Summit 2020
-Airline SAS is seen falling 7% after reporting big Q4
losses. Travel firm Tui meanwhile secured a third state bailout
(Sujata Rao)
*****
MORNING CALL: NO TREND JUST YET (0636 GMT)
There's been no dramatic change of mood between yesterday's
close, when the STOXX 600 ended its session just a tad in the
red and this morning's flattish futures.
Asian shares were also mixed overnight, although slightly
on the positive side, with a choppy session on Wall Street.
In what has been a 'risk-on' signal recently, the dollar is
trading around 2-1/2 year lows amid growing optimism on the
imminent roll out of the coronavirus vaccine.
Oil prices tell another story though as producers, including
Saudi Arabia and Russia, locked horns over the need to extend
record production cuts set in place in the first wave of the
COVID-19 pandemic.
(Julien Ponthus)
*****
Rolls-Royce (RR.)
