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, including May’s Brexit pleas falling on deaf ears and slowing Chinese growth.

Brexit Hardball

European Union leaders provided little cheer for embattled U.K. Prime Minister Theresa May, rebuffing her pleas to provide further assurances on controversial aspects of her Brexit deal. Rather than offering her a lifeline to help get the deal through Parliament, leaders hardened their approach. After a turbulent week, we’re broadly back to where we started. May has an unloved deal that’s unlikely to change or get through Parliament. Expect more volatility in the pound and U.K. stocks as headlines hit screens.

Slowing China

Asian stocks have fallen and European futures are pointing to a red open as the slowdown in Chinese economic growth is showing precious little sign of abating. Growth in industrial production decelerated in November and retail sales showed the weakest performance since 2003. Trade tensions and arrested CFOs take many of the headlines, but the growth slowdown is an equally important point to watch for cyclical stocks like miners and industrials, which could be weak today.

French Tensions

“Yellow Vests” are planning another set of protests across France over the weekend, potentially setting the country up for another turbulent few days. Security concerns were already raised this week by the terror attack in Strasbourg so the potential for the protests to turn ugly will surely be higher. It also appears the measures announced by President Emmanuel Macron this week, which will cause some harm to French government finances, won’t be enough. Watch French retailers and others already hit by the “Yellow Vest” unrest.

Hotel Deals

French luxury giant LVMH is reportedly close to a deal to acquire high-end hotel operator Belmond Ltd. in a deal sure to shake up the hotels market and add a new potential suitor to the space. Watch for any read-across into other European hotel names, where merger speculation is often rife, particularly in the wake of the Marriott-Starwood deal.

Construction Health

Balfour Beatty Plc will be the latest name in the troubled U.K. construction sector to update, following the share meltdown at rival Kier Group Plc and the effective wipe-out of shareholders at heavily-indebted Interserve Plc. Both have been hit by weakness in their construction arms so investors will be looking closely at Balfour Beatty’s update to see if those are company-specific problems or if the industry as a whole is indeed suffering.

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