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INSURERS: TAKE A LOOK AT SOLVENCY RATIOS (1033 GMT)
With shares of European insurers trading at a significant
discount to the benchmark Stoxx 600 index, the picture is
getting attractive amid rising solvency ratio estimates.
UBS says estimates for solvency ratio -- a company's ability
to meet its long-term obligations -- for the sector "increased
by +8 ppts on average since FY20 to 199% driven largely by the
increase in interest rates."
This "screens well both for downside protection but also for
potential for upside to dividend/capital return," according to
With the sector trading at a 40% discount to the Eurostoxx,
compared to its historical average of 20%, this higher solvency,
along with macro tailwinds, "means the sector's capital return
screens attractive," they say.
Among single names, UBS says Generali (231%), NN Group
(216%) and Aviva (209%) standout with the highest solvency
Chart below shows European insurer stocks
underperforming the Stoxx 600.
NEW RECORD HIGH FOR STOXX (0847 GMT)
European shares are off to a positive start this morning
with the STOXX 600 making a fresh record high in early deals and
the FTSE 100 hitting its highest in more than a year, helped by
dovish messaging from the Fed minutes.
The pan European benchmark was last up 0.3% while the UK's
top share index added 0.1%, both off initial highs.
"Investors’ risk appetite is on the rise again as the Fed
officials renewed their dovish tone yesterday by announcing that
the massive bond-buying program will continue for 'some time',”
said Pierre Veyret, analyst at ActivTrades.
"The mood has been further strengthened by Janet Yellen
confirming a $2 trillion fiscal aid plan in the US," he added.
In single stocks worth highlighting that telco M&A is back.
KPN shares are rising 2.3% after a media report said private
investors were preparing an attempt to buy the top Dutch
telecoms provider. KPN declined to comment.
KEEP THE FAIT (0709 GMT)
The messages from the Fed's minutes could not be clearer.
First, despite the blowout March payrolls report, labour markets
are nowhere near its threshold for reining in easy monetary
policy. And the Fed aims to let inflation average 2% for some
time before contemplating any tightening.
In short: FAIT or flexible average inflation targeting.
The message seems to have sunk in - 10-year Treasury yields
are some 10 basis points off recent highs, a spike in
short-dated yields has abated and some of the most aggressive
pricing of Fed rate hikes has been scaled back.
Markets will await Fed Chair Jay Powell's appearance at the
IMF spring meetings but the minutes have lifted U.S. equity
futures half a percent, following Wednesday's records on Wall
Street. European stocks are opening higher too, with the UK's
FTSE looking to extend its Wednesday run to record highs.
On the economy front, strong German domestic demand lifted
industrial orders for the second straight month, hot on the
heels of this week's PMI revisions that showed euro zone
business activity back in growth.
The fly -- (or the virus) -- in the ointment is of course
COVID-19 with infections surging in India, Tokyo set for
emergency measures and some evidence of blood clots linked to
the Astra Zeneca vaccine.
Key developments that should provide more direction to
markets on Thursday:
- Corporates: Holland-based Prosus sold 2% of
Chinese gaming giant Tencent for $14.7 billion in the
largest-ever block trade; Clothing retailers Asos and Uniqlo
reported robust profits, the former seeing an astonishing 275%
- Japan's consumer confidence improved in March.
- G20 finance officials to debate President Joe Biden's
minimum corporate tax plan
- Data: Euro zone, UK construction PMI; Euro zone PPI Feb;
U.S. weekly jobless numbers
- IMF/World Bank Spring Meetings: World Bank head Kristalina
Georgieva, Fed Chairman Powell, and WTO Director General Ngozi
Okonjo-Iweala to speak
- ECB: Vice President Luis de Guindos speaks
- Emerging markets: Peru, Sri Lanka central bank meetings
EUROPEAN BOURSES SEEN ON THE BLACK AFTER FED MINUTES (0535
In a data heavy morning, European shares are seen in the
black this morning after the Fed renewed its commitment to
keeping policy super loose even as the U.S. economy enjoys a
Fed remains wary about the ongoing risks of the pandemic and
is committed to bolstering the economy until its recovery is
more secure, according to minutes of the U.S. central bank’s
latest policy meeting.
U.S. stock futures just hit fresh record highs, while
European futures are also in positive territory.
Eyes will also be on PMI figures for the UK and the EZ,
which are due this morning.
Financial spreadbetters at IG expect London's FTSE to open
23 points higher at 6,909, Frankfurt's DAX to open 62 points
higher at 15,239 and Paris' CAC to open 27 points higher at