Here’s What to Watch in European Stocks This Morning

(Bloomberg) -- Good morning. Here’s what we’re watching ahead of the market open in Europe, including…

Trade Talks

China has said a U.S. delegation will visit next week for trade talks in a confirmation the two sides will be holding the first face-to-face negotiations since a 90-day truce in the trade war was announced last month. The week has been peppered with warning signs about the impact the trade war is having on the manufacturing bases of various countries, so signs that talks are due to get underway again and hopes that they will result in a permanent agreement to remove the uncertainty the trade war has wrought on markets should be welcomed. European stock futures are pointing higher.

Crude Awakening

A fraught start to 2019 for oil traders who may have been hoping to ease into the new year. Oil prices have been bouncing around in the past couple of sessions on the same tensions that caused so much of the late-year volatility in 2018, namely concerns about a supply glut and the strength of the global economy. U.S. oil inventory data is due on Friday late in the European trading session, so some extra turbulence is entirely possible both before and after that will keep watchers of the region’s oil stocks on their toes.

Data Dump

A slew of European economic data should help liven up a week so far dominated by concerns about China and after the rough U.S. manufacturing numbers on Thursday. Euro area services PMIs and inflation data will be closely watched, as will two reports in the U.K. on its key services industry and on house prices, one of the chief victims of Brexit-related uncertainty. An update on the state of the European economy, after the Stoxx 600 benchmark index suffered a 5.6 percent drop in December and had its worst quarter since 2011, may be much needed.

Drug Deals

The year got started with a massive $74 billion takeover in the U.S. drugmaking sector, with Bristol-Myers Squibb Co. agreeing to buy cancer-treatment producer Celgene Corp. The news caused European health-care stocks to turn positive as thin news flow elsewhere got tongues wagging about whether some more big pharma deals could emerge. Look for analyst chatter in  coming weeks on which names are the most likely targets, even if certain calls already made this year have made market watchers a touch more sheepish than they would otherwise have been.

Shutdown Tensions

The newly-installed Democrats in the U.S. House of Representatives voted to end the partial government shutdown on Thursday but the disagreements which have kept the shutdown going don’t look much closer to being solved. President Donald Trump and Senate Republicans both oppose the Democrats’ plans and there will be a summit at the White House on Friday morning where attempts will be made to find a compromise. If not, add this to the list of risks investors will need to keep an eye on as we move further into the new year.

To contact the editor responsible for this story: Tom Lavell at tlavell@bloomberg.net

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