|Day's Range||11,715.26 - 11,853.14|
|52 Week Range||10,279.20 - 12,656.05|
Global markets turn cautions after FOMC minutes, yield-curve inversion despite better than expected results from the retailers.
European stocks drifted lower on Thursday, after indications that the Federal Reserve last month wasn’t aggressively looking to cut interest rates.
After a quiet start to the week, it’s a busy day ahead. On top of the PMIs and ECB minutes, there will also be a reaction to the FOMC minutes…
As Italian politics seemingly sets the direction for European stocks, analysts say there’s a multiple ways the tenuous political situation can be resolved. Italy’s FTSE MIB (IT:I945) up about 12% for the year, rallied 2.02% to 20902.76 as the nation waits for President Sergio Mattarella to decide whether to hold fresh elections after the resignation of Prime Minister Giuseppe Conte on Tuesday. Possibilities included a snap election, a coalition between the 5 Star Movement and the Democratic Party, or a reconciliation between the 5 Star Movement and the League.
Global markets rebound on strong retail earnings despite several looming global crisis and the release of FOMC minutes.
German engineering has long been the envy of the world. Eight of the 30 Dax companies are currently suffering from self-inflicted wounds that have cost shareholders dearly. One leading private equity investor says that group’s “collective failure” has been caused by “the arrogance of power”.
It’s another quiet day on the economic calendar, which will leave the markets exposed to geopolitical risk and sentiment towards FED monetary policy.
Global markets are mixed after Monday’s sharp rebound, traders are focused on the expected release of FOMC minutes and an important speech from Jerome Powell.
Stock markets edged higher on Tuesday as investors welcomed signs that more monetary and fiscal stimulus was on its way, hoping more easing would help stave off a major global economic downturn. After a tumultuous first half of August when investors dumped equities and poured their money into government debt and other safe havens, some calm has returned to markets this week amid talk of more stimulus in China and Germany.
Investing.com - U.S. futures were flat on Tuesday on a relatively quiet morning that in which Home Depot's quarterly update helped to dispel some concerns about the impact of the U.S.-China trade war on the domestic economy.
European shares followed their Asian counterparts higher on Tuesday as investors bet possible monetary and fiscal stimulus measures would help stave off a major global economic downturn. After a tumultuous first half of August as investors dumped equities and poured their money into government debt and other safe haven assets, some calm has returned to markets this week as traders welcomed talk of more stimulus in China and Germany. Investors were cheered by signs policymakers were willing to do more to support their economies in the grip of international trade frictions, led by the bruising Sino-U.S. tariff tussle, and not everyone thinks the economy is in as bad shape as the market selloff last week implied.
(Bloomberg) -- Last year, U.S. 10-year yields weren’t low enough to really boost the equity market’s appeal. This summer, the inversion of the yield curve is suddenly triggering worries of a U.S. recession, while bund yields are deep into negative territory as Germany seems heading for an economic downturn. Yet there’s few signs of panic among equity traders.Many in the market agree that a U.S. recession isn’t imminent. UBS strategists see the inverted yield curve more as “a statement on lackluster growth in the rest of the world,” and suggest a slowdown would take some time to materialize.One interesting point they note is that European equities seem to have been more vulnerable than U.S. stocks to the gyration of the U.S. 10-year bond yield over the past six months.The U.S. 10-year yield has only fallen below 1.6% on two previous occasions: mid-2012 and mid-2016. According to Citi strategist Jonathan Stubbs, it has worked well as a buy signal for European equities both times, with the DAX returning 23% on average over the next 12 months, the CAC 24%, and the FTSE 17%. Of course, with Fed cuts, ECB QE and trade concerns, things may be different this time, he says.So, should we be worried? Not yet, according to JPMorgan strategists including Mislav Matejka. Over the past six historical episodes, yield-curve inversion preceded recessions by 17 months on average, while the equity market peaked about 11 months after the inversion, they write. Even if the risk of a downturn next year is increasing, much can happen in the meantime. They still expect equities to make all-time highs into the first half of 2020 and see the current pull-back not lasting beyond early September as the ECB will start quantitative easing and the second Fed rate cut might be bigger than the first.The bounce in the U.S. 10-year yield over the past couple of days may have also provided some relief. Indeed, Bank of America technical analysts note that extreme momentum has pushed the monthly Relative Strength Index (RSI) of the U.S. 10- and 30-year bonds into their fourth and fifth-most overbought level ever. This may signal an imminent “key low” or “pivot low.”And not all is bad about negative yields anyway. The more bond yields move deep into negative territory, the more stocks are seen by many as the only attractive asset. Why buy a bond on which you’re guaranteed to lose money while you can buy stocks with lofty dividend yields of 5% or more?True, if held until maturity, government bond yields don’t look appealing. But on an absolute-return basis, some long-duration securities beat stocks. Notably this year, Austria’s 100-year note has delivered investors as much as an 80% return so far. Granted, the timing must be right and liquidity could be an issue.Finally, let’s not forget about another silver lining. With Germany facing the danger of a recession, the government has signaled it stands ready to inject stimulus if things turn sour. Since the bund curve has turned negative across all maturities, financing those fiscal measures in the long-term is even more appealing.In the meantime, Euro Stoxx 50 futures are trading little changed ahead of the open, while S&P 500 contracts are up 0.2%.SECTORS IN FOCUS TODAY:Watch the dollar after President Trump called for the Federal Reserve to cut rates by at least a full percentage point in order to weaken the U.S. currency. Fed Chairman Powell is expected to signal the potential for another cut on Friday, though some of his colleagues are not convinced.Watch the pound and U.K. stocks after U.K. Prime Minister Boris Johnson reiterated the country will be ready to leave the European Union without a deal by the current deadline at the end of October and is planning a September publicity blitz to prepare the public for a so-called hard Brexit. Meanwhile, the Labour party is gearing up for an election.COMMENT:“The flattening of the yield curve was pretty extreme and not what we would naturally expect with the Fed cutting rates, as news should generally affect near-term pricing more than the pricing of bonds maturing in 2040," Emiel Van Den Heiligenberg, head of asset allocation at LGIM, writes in a note. "We therefore aren’t convinced the current situation is sustainable, as the more the curve flattens, the more vocal some members of the Federal Open Market Committee will be in calling for rapid rate cuts.”NOTES FROM THE SELL SIDE:Peel Hunt initiates Playtech with an add rating, as the broker says that although the company is a “strategic muddle,” there is a will to sort out its issues which are “now exposed to daylight.”Jefferies says the biggest potential Brexit risks to the paper & pulp sector are goods-trade disruptions across U.K.-Europe borders as well as a potential macro slowdown next year in those markets. Mondi is seen as least exposed to U.K., SCA has the most U.K. sales exposure while DS Smith will see biggest FX sensitivity to earnings as a co. reporting in GBP with most profits coming from outside the U.K.European insurers have been surprisingly strong in the past 12 months but falling investment yields turns Bankhaus Lampe more cautious on the sector in a note downgrading its rating on Zurich to sell. Separately, Jefferies upgraded its rating on Zurich to buy.COMPANY NEWS AND M&A:BHP Gives Investors Bonanza Returns And a Trade Spat Warning (1)BHP CEO Says Top Miner Can Still Profit In Any Global DownturnBain, Carlyle Said to Weigh Raising Osram Bid to Counter AMSCasino Identifies New Asset Diposals Worth EU2bBNY Mellon, Societe Generale to Join German Cum-Ex Trial (1)Pandora Second Quarter Revenue 1.3% Above EstimatesBasilea Narrows FY Operating Loss View, Midpoint Wider Than Est.Seadrill Ltd 2Q Adjusted Ebitda Beats Highest Est.South Korea May Fine Audi, Porsche over Alleged Emission-RiggingColoplast Chairman Lars Rasmussen Sells Shares Using OptionsAmbea Second-Quarter Net Sales Beat Highest EstimateAnglo American Pledges $30m for Peru Projects to End ProtestsGreene King Banishes Brexit Blues With Some Help From Hong KongCarige Calls Investor Meeting to Back $1 Billion Rescue PlanTECHNICAL OUTLOOK for Stoxx 600 index:Resistance at 374.5 (61.8% Fibo); ~386 (uptrend); 395.1 (July high)Support at 370.9 (200-DMA); 365.5 (50% Fibo, May low)RSI: 45.5TECHNICAL OUTLOOK for Euro Stoxx 50 index:Resistance at ~3,400 (uptrend) 3,403 (61.8% Fibo); 3,443 (50-DMA)Support at 3,249 (June/August low); 3,301 (200-DMA)RSI: 46.8MAIN RESEARCH AND RATING CHANGES:UPGRADES:Alstria Office upgraded to overweight at JPMorgan; PT 18 EurosAntofagasta upgraded to neutral at Goldman; PT 8.50 PoundsFLSmidth upgraded to overweight at JPMorgan; PT 360 KronerGlencore upgraded to neutral at Goldman; PT 2.20 PoundsHumana upgraded to buy at Handelsbanken; PT 57 KronorZurich Ins. upgraded to buy at Jefferies; PT 380 FrancsDOWNGRADES:Continental cut to hold at Deutsche Bank; PT Set to 120 EurosGreene King cut to equal-weight at Morgan StanleyMetrovacesa downgraded to sell at Goldman; PT 8.12 EurosProximus downgraded to sell at Goldman; PT 21 EurosRentokil downgraded to sector perform at RBC; PT 4.70 PoundsRepsol downgraded to underweight at Barclays; PT 16 EurosZurich Ins. downgraded to sell at Bankhaus LampeINITIATIONS:Addiko rated new buy at Goldman; PT 27 EurosOlvi Oyj rated new buy at SEB Equities; PT 41 EurosPlaytech rated new add at Peel Hunt; PT 4.25 PoundsStobart rated new outperform at MacquarieMARKETS:MSCI Asia Pacific up 1%, Nikkei 225 up 0.5% S&P 500 up 1.2%, Dow up 1%, Nasdaq up 1.4%Euro up 0.05% at $1.1084Dollar Index down 0.01% at 98.34Yen up 0.11% at 106.52Brent up 0.1% at $59.8/bbl, WTI little changed at $56.2/bblLME 3m Copper down 0.1% at $5768/MTGold spot up 0.1% at $1497.4/ozUS 10Yr yield down 2bps at 1.59% ECONOMIC DATA (All times CET):11am: (EC) June Construction Output MoM, prior -0.3%11am: (EC) June Construction Output YoY, prior 2.0%12pm: (UK) Aug. CBI Trends Total Orders, est. -25, prior -3412pm: (UK) Aug. CBI Trends Selling Prices, prior 12To contact the reporters on this story: Michael Msika in London at email@example.com;Jan-Patrick Barnert in Frankfurt at firstname.lastname@example.orgTo contact the editors responsible for this story: Blaise Robinson at email@example.com, Jon MenonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Europe stocks on Monday started the week in an upbeat frame, as government officials across the globe discussed how the world economy could avoid a sharp downturn.
European shares ended higher for a second straight session on Monday on signs that measures would be adopted to prop up growth in major economies, while bond yields rebounded amid improved global sentiment plagued by recession worries. The pan-European STOXX 600 index, hammered since the start of August by worries of a possible global slowdown, ended 1.2% higher, with Frankfurt shares up 1.3%, recovering from last week's six-month low. "It's a continuation of what we saw on Friday, the hope that their government will step in to provide fiscal stimulus to boost growth in the economy," said Carsten Brzeski, chief economist, Germany at ING.
The majors are set for a positive open. Sentiment could deteriorate rapidly, however, should trade war chatter hit the news wires…
Investing.com - Stocks rallied Friday, finishing near their highs for the day, as trade tensions appeared to ease and reports suggested Germany might consider ideas to stimulate its faltering economy.
World stocks rose on Friday as expectations grew of further stimulus by central banks, offsetting worries about slowing economic growth, which intensified this week as the U.S. yield curve inverted for the first time since 2007. With no settlement in sight, investors have hedged against a global slowdown by buying bonds.