LIVE MARKETS-Vaccine: China's catch-up

* Inflation worries ease
* Global markets in 'buy the dip' mood
* STOXX 600 up 0.7%
* Wall Street futures march on
* Nasdaq future up 1%

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VACCINE: CHINA'S CATCH UP (1203 GMT)
Europe seems to have finally found its course in its
vaccination campaigns and while emerging markets are lagging,
China is catching up with the developed world (DM).
According to the UBS ' global vaccination tracker, DM is now
on track to vaccinate 92% of its population this year.

If China sustains last week's daily rate, it will inoculate
87% of the population by year-end compared to just 26% in India,
UBS analysts say.
They estimate Chinese vaccine producers to be able to
produce as many as 5.8bn doses, which should be ample for
China's own population.
UBS analysts expect an improvement in daily vaccinations in
India by mid-June, while the slowdown seen this week in Brazil
is about to reverse with more supply.

(Stefano Rebaudo)
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BIG MONEY NOT BUYING EVERYTHING (1105 GMT)
One way for private equity firms to deploy big cash is by
acquiring large listed companies.
Take private deals have ballooned in the UK since 2019 in
line with a global trend that has seen more and more companies
choosing to delist, allured by juicy valuations on offer by
buyout firms.
Yet, today's setback in Cinven's attempt to take over
alternative asset and corporate services Sanne Group is
a gentle reminder that things haven't been going completely
smooth for buyout firms.
"Total investment value last year was supported by
ever-larger deals, not more deals. This fact is important
because it means many GPs (general partners) did not get the
deals done that they had intended to in 2020," Bain said in its
2021 private equity report.
In terms of take private deals in the UK, private equity
firms acquired 17 companies last year, down from 25 in 2019,
Dealogic data shows.
Yet the amount of money spent in dollar terms in take
private deals in 2020 was higher than in the previous year.
The data below also shows how 2021 is already on track to be
one strong year for take private deals in the UK.

Announced UK take private Number of take
Year deal value private deals
in USD (m)
2008 9,186 19
2009 1,384 13
2010 7,620 10
2011 525 5
2012 2,306 8
2013 2,352 6
2014 4,677 10
2015 4,662 11
2016 3,823 9
2017 6,408 12
2018 9,220 16
2019 28,067 25
2020 26,210 17
2021 YTD 15,544 12
Data from Dealogic

Sanne rejected Cinven's 1.35-billion-pound ($1.90 billion)
take over offer saying it was too low, even if it came at hefty
premium of about 38% to Sanne's last closing price.
Shares in the company today jumped as much as 27%.

(Joice Alves)
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BUY THE DIPS AND TEST THE FED (1056 GMT)
It seems that equity strategy is now mainly about central
banks' stance as the market has already priced in safe
reopenings coupled with a solid economic rebound.
Rising inflation expectations started hurting the
"goldilocks mindset," as Barclays analysts put it, but investors
have reasons to test the Fed.
So, bottom line, "dips should be bought" while it's better
to continue favouring a pro-value allocation.
It was easy in the last 12 months, "with the turbocharged
recovery coming hand in hand with super dovish central banks."
But right now, "technicals are not overbought anymore and
sentiment less euphoric," Barclays analysts say.
"We expect macro volatility to keep rising, as the recovery
matures and policy uncertainty increases, which equities will
have to learn to live with," they add.
A Fed tapering is a risk, but "rising inflation gives
markets a reason to test the Fed's reaction function and ask for
clarity on their policy roadmap."
Same with the ECB with bund yields "rising much faster than
U.S. rates recently, and EUR appreciating too."
Furthermore, equities are well-positioned in terms of flows
(see chart below).
(Stefano Rebaudo)
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WILL CHINA MITIGATE THE GLOBAL INFLATION SHOCK? (1008 GMT)
Something is missing in the debate about inflation, namely
what will happen in China -- rightly regarded as the worlds'
factory by many economists -- regarding prices.
According to Societe Generale, the country is set to
mitigate a global inflation shock.
"A rapid rise in China's PPI is not unusual at all at the
beginning of an economic cycle. Also, we think the demand
impulse from China this time is less sizeable than the
post-global financial crisis," SocGen economists say.
They expect the producer price index (PPI) to rise to 8%
before turning down in the second half of 2021 due to fading
base effects, easing bottlenecks in emerging markets, and
slowing credit impulse.
They say the inflation pass-through from upstream to
downstream appears incomplete and China has been “an absorber of
upstream inflation for the world. Competitive and highly
regulated downstream sectors have to accept margin compression
when upstream inflation is on the rise.”
People Bank of China will get no window to raise interest
rates at all, SocGen economists argue.
"By year-end, the economic momentum may have started to
weaken, as suggested by the rapidly falling credit impulse now.
The implication is again mounting downward pressure on China's
economic growth and inflationary impulse/spillovers."

(Stefano Rebaudo)
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NIBBLING IN THE DIP (0755 GMT)
European shares are rising on Friday with investors
cautiously buying the dip after a volatile week.
The pan-European STOXX 600 index is rising 0.3% but
it is still on track for weekly losses on inflation fears after
data showed this week that U.S. consumer prices increased by the
most in nearly 12 years in April.
In terms of single stocks, the big winner is corporate
services firm Sanne Group, with its shares jumping almost 30%,
putting the company on track for its best day ever after it
rejected a buyout offer from private equity firm Cinven, which
says it is now considering options.

(Joice Alves)
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A SAUCERFUL OF DATA (0726 GMT)
World stocks are set to register their biggest weekly drop
in 2-1/2 months after this week's economic data stoked
inflation fears in the United States and the prospect of
earlier-than-expected monetary policy tightening.
A blowout reading on U.S. wholesale prices and jobless
claims on Thursday followed Wednesday's data showing a stunning
jump in consumer inflation. Inflationary pressure is undoubtedly
building in the United States as vaccine rollouts bring
economic normalisation but the jury is out on whether it will be
a lasting change or merely transitory.
Fed speakers including the Richmond Fed's Thomas Barkin and
the St Louis Fed's James Bullard offered up soothing words to
the effect that no policy shifts were imminent. That has helped
reverse some of this week's steep market losses, with U.S. and
European shares set for stronger opens after a firm Wall Street
close.
But signs of nervousness are palpable; market volatility
gauges such as the VIX -- Wall Street's "fear gauge" are holding
near March highs.
The dollar too, despite a small pullback overnight, is
poised to close the week with healthy gains, especially against
the yen. U.S. retail sales due later on Thursday may decide
whether the dollar punches above the 110-yen level that will
mark a two-month high.
Also global bond yields have eased - 10-year German
borrowing costs have retreated from two-year highs for instance
-- but inflationary concerns remain at the forefront with
10-year U.S. break even inflation rates comfortably perched near
eight-year peaks.
It's also been a big week for cryptocurrencies. Bitcoin is
holding just below $50,000. Smaller rival dogecoin meanwhile
jumped as much as 20% after Tesla’s chief Elon Musk tweeted that
he was involved in work to improve the token's transaction
efficiency.
With the earnings seasons in cooling mode, the focus is
shifting to the red-hot SPAC market with British technology
investor Ian Osborne raising 400 million euros via a SPAC
listing in Amsterdam
Finally pandemic news is less than reassuring, with
Singapore announcing the strictest curbs on social gathering
since easing a COVID-19 lockdown last year while the number of
infections in India climbed above 24 million in India.

Key developments that should provide more direction to markets
on Friday:

U.S. Retail sales, industrial production
ECB April meeting minutes
University of Michigan consumer sentiment Index for May

(Saikat Chatterjee)
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EUROPE ON THE WAY UP AGAIN (0610 GMT)
Inflation? What inflation?
European bourses are set to open firmly higher on Friday
with futures up about 0.7% after Wall Street switched into a
'buy the dip' mood.
It seems the Fed managed to reassure markets that rates
won't rise until policymakers either see inflation above target
for a long time or excessively high inflation.
Sentiment was also quite positive in Asia where MSCI's
index of Asia-Pacific shares outside Japan gained 0.8%.

(Julien Ponthus)
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