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STOXX UP, VOLATILITY DROPS, EARNINGS PLEASE (0852 GMT)
A raft of good looking earnings updates is doing its job this morning, pushing European stock markets higher at the open and driving a euro zone gauge of stocks' volatility further below the 16-month peak hit on Monday.
The STOXX 600 equity benchmark was last up around 0.8% with gains spread across all sectors and autos leading the way higher, up over 2%, following strong profitability numbers from Stellantis.
Other top gainers were also reacting to results, while hopes a war in Ukraine could be averted also came in play. Unite Group rose 8% as the student housing provider returned to profit. A strong Q4 boosted Aegas up 7% and JDE Peet's gained 6% on better than expected earnings. Danone and Barlcays also jumped on solid numbers.
(Danilo Masoni)
ANOTHER RATE HIKE FROM NEW ZEALAND (0751 GMT)
The Ukraine crisis may be tempering the most aggressive rate hike bets but New Zealand's latest interest rate rise suggests central banks remain firmly on the path towards tighter policy.
The Reserve Bank of New Zealand on Wednesday delivered its third straight rate increase, taking key policy rates to 1%. And it signalled a more aggressive tightening path to counter inflation, lifting the Kiwi dollar to a one-month high.
It also revealed plans to wind down its NZ$50 billion ($33.82 billion) bond holdings.
Officials at other central banks also made clear rate hikes were on their minds.
Bank of England deputy governor Dave Ramsden on Tuesday said he expects to see further tightening ahead while ECB policymaker Robert Holzmann is being quoted this morning saying the ECB could hike rates in the summer, before ending its bond buying.
Still, tensions between the West and Russia over Ukraine do complicate the outlook for policy, especially at the ECB. Germany's decision to put Nord Stream 2 certification on hold sent European natural gas futures sharply higher.
Further upward pressure inflation could be a by-product of the geopolitical tensions.
For now, markets are on steadier ground as investors await fresh developments. Asian stocks steadied overnight, European and U.S. stock futures are firmer.
On the earnings front, British bank Barclays said its annual profit nearly trebled as bad loan charges plunged and its investment bank continued its strong recent performance.
Key developments that should provide more direction to markets on Wednesday:
- Rio Tinto full-year profit soars on iron ore prices
- German GFK consumer sentiment
- WTO's General Council starts two-day meeting
- ECB: board member Frank Elderson; ECB VP Luis de Guindos speak
- Fed: Altanta Fed president Bostic speaks
- South African budget
- US 5-year note auction/2-year floating rate note sale
- US earnings: Lowe’s, Office Depot, Molson Coors, eBay
- European earnings: Stellantis, Merlin, Avast, Rio Tinto, Iberdrola, Barclays, Danone, Puma, Metrobank
(Dhara Ranasinghe)
EUROPE SET TO OPEN CAUTIOUSLY HIGHER (0738 GMT)
European shares look set to open slightly higher this morning after the West imposed what appeared to be relatively modest initial sanctions against Russia for ordering troops into separatist regions of eastern Ukraine.
Futures on the EuroSTOXX 50, DAX and FTSE indices were up around 0.4% following mild gains across Asian markets and as contracts on U.S. benchmarks also inched up after Wall Street closed off lows on Tuesday.
Risks that the Ukraine crisis could still escalate further into a full Russian invasion however are likely to keep investors wary of making any big directional bet and make for another day of choppy trading.
In corporate news, it's another heavy day for earnings releases in Europe with Barclays profits nearly trebling, Danone beating estimates, and Rio Tinto setting a record $17 billion dividend.
(Danilo Masoni)
Unite (UTG)