* STOXX 600 index flat
* FTSE unfazed by new UK lockdown
* Retail and oil and gas stocks up lead
Jan 5 - Welcome to the home for real-time coverage of
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INFLATION? NO WORRIES (1005 GMT)
Inflation is seen as a major concern for equities as it
could disrupt the lower for longer interest rates scenario which
is one of the factors propping up stock valuations.
But some analysts argue we should not worry about it.
According to Blackrock, “nominal yields will be less
responsive to rising inflation risk than in past episodes. This
suggests risk assets will perform better than in past
inflationary periods.”
Medium-term inflation risks “look underappreciated” as
production costs are seen to rise on a rewiring of global supply
chains, while central banks appear more willing to let economies
run hot with above-target inflation,” Blackrock says in a report
about its 2021 outlook.
Blackrock favours inflation-linked bonds and expects
equities to be supported by falling real interest rates.
Geographically speaking, the global investment manager
suggests being exposed to China and to the U.S., “the two poles
of global growth,” while tactically it likes Asia-ex Japan. It
is under-weight on Europe and Japan.
Sustainability is one of the main issues of the
post-Covid-19 era, but Blackrock takes a barbell approach,
“favouring quality stocks balanced with selected cyclical
exposures.”
(Stefano Rebaudo)
*****
OPENING SNAPSHOT: RETAILERS AND OIL AND GAS LEAD (0843 GMT)
Equities are little changed as bullish sentiment seems to be
undeterred, but investors paused the enthusiasm a tad ahead of
the results of the runoffs in Georgia that will decide which
party controls the U.S. Senate.
Democrats have to win the two seats in order to put the
balance at 50-50 with the tie breaker vice-president Kamala
Harris.
The STOXX 600 flattened after opening higher, with retailers
stocks leading gains up 1.3%, followed by oil and gas shares
while deadlocked talks between major oil producers about
potential changes in February output are set to continue later
in the day.
Among single stocks Next is the best STOXX 600
performer, up 7.7%, after its trading update.
Shares in UK airlines suffer a negative start after stricter
lockdown measures but they recover quickly and are now not far
from yesterday’s levels.
(Stefano Rebaudo)
*****
U.S POLITICS BACK IN THE SPOTLIGHT (0633 GMT)
European stock futures are in negative territory as
attention turns to runoff elections in Georgia, which will
decide the majority in the U.S. Senate with a significant impact
on president elect Joe Biden’s agenda.
The outcome of the vote is too close to call but the
uncertainty, which could drag on for days, might create a
fertile breeding ground from some pullbacks.
Slow counting of Georgia's mail ballots could unfold after
today's contests if the races are close. Public opinion polls
show Republican incumbents have about the same level of support
as their Democratic challengers.
(Stefano Rebaudo)
*****
Next (NXT)
