Here's What to Watch in European Stocks This Morning

(Bloomberg) -- Good morning. Here’s what we are watching ahead of the market open in Europe:

Bolsonaro’s Brazil

Shares of companies with exposure to Brazil may gain after the country elected Jair Bolsonaro, a right-wing advocate of free market economics and privatization, as its new president. The former army captain dubbed the “Trump of the Tropics” is seen by many investors as the best hope of reviving Brazil’s ailing economy. The long list of companies with exposure to Brazil includes the Spanish parent of the O2 mobile network, Telefonica S.A., Spain’s largest bank, Banco Santander S.A., French grocer Carrefour SA and consumer staples giants like the Anglo-Dutch firm Unilever.

HSBC’s Costs

HSBC Holdings Plc reported third quarter revenue gains that outpaced its cost increases, spurring a 16 percent increase in adjusted pretax profit for the period. The London-based bank is heavily Asia-focused, and releases its numbers during that region’s business hours. Its Hong Kong-traded shares rose as much as 5.6 percent, the most since June last year. Standard Chartered Plc could also move, as like HSBC, it earns more than 40 percent of its net revenue in Asia.

Italian Relief

Italy’s assets could be buoyed by S&P’s decision to keep its BBB rating on the country’s debt, opting instead to only assign it a “negative” outlook. Although that means the risk of a downgrade has not fully abated, it removes any immediate threat of the country being pushed into junk territory and could spur a recovery in its bonds. S&P’s report comes as Italy’s new government is attempting to win over the European Union amid concerns over the country’s latest budget proposal.

IBM Blockbuster

Computer services giant International Business Machines Corp. will pay $33 billion for software developer Red Hat Inc., marking its biggest-ever acquisition. The deal for the Linux operating system-developer “changes everything about the cloud market,” IBM said in a statement. It’s paying a huge premium of around 60 percent over Red Hat’s closing price on Friday. Watch shares of the U.K.’s Micro Focus International Plc and The Sage Group Plc, as well as Germany’s SAP SE and Software AG for any reaction to the deal.

Hammond Time

Retailers, homebuilders, bookmakers and brewers are just some of the U.K. sectors in focus ahead of today’s autumn budget. Chancellor of the Exchequer Philip Hammond is under pressure to put an end to austerity amid a backdrop of Brexit uncertainty. Click here for a full preview of the stocks to watch during today’s speech, and here for a live blog on the event from about 3.15 p.m. local time.

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