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…
Back to Brussels
U.K. Prime Minister Theresa May has got a mandate from Parliament to head back to the European Union and renegotiate her Brexit plans. The EU seems entirely uninterested in more talks. The pound dropped after Tuesday’s votes , so the market verdict seems clear. Now the ball is back in the EU’s court just as Brussels hears reports of potential early elections in Italy.
Let The Talks Commence
The U.S. and China start two days of trade talks to try to find a permanent truce as the clock runs down on the temporary detente they reached. Echoing the background of that first cooling of relations, tensions have been raised in the past couple of days by the U.S. filing criminal charges against China’s Huawei Technologies Co. President Donald Trump is going to meet with China’s top trade negotiator and Treasury Secretary Steven Mnuchin thinks there is a chance the U.S. could remove all tariffs if China plays ball. Others are less optimistic.
iPhones, Handbags and Iron Ore
Europe’s tech sector is likely to have a day in the green after Apple Inc.’s results indicated stability has returned and following a positive forecast from chipmaker Advanced Micro Devices Inc. Meanwhile, French luxury giant LVMH SE provided welcome reassurance to those concerned about slowing sales of pricey items in China, easing at least some fears about the impact of the trade war after the jitters caused by the likes of Caterpillar Inc. this week. Watch miners too after Brazil’s Vale SA outlined plans to cut output after a dam disaster, sending already higher iron ore prices rocketing.
The Federal Reserve will make its interest rate decision after the close in Europe but it will be at the forefront of minds for most of the day, even with the noise of Brexit and trade. Messages from the U.S. central bank have had a big market impact in the past month, so what Jerome Powell and Co. have to say, and how it’s said, will be scrutinized to the nth degree. Economists expect the Fed to say risks look “roughly balanced” and to stay on hold, but still see two more hikes in 2019.
The Fed will be the main event after trading closes in Europe but watch too for oodles of big earnings reports from the U.S. Fast-food giant McDonald’s Corp., airplane maker Boeing Co. and telecoms group AT&T Inc. will all report during European market hours, with numbers after the close from Microsoft Corp., chipmaker Qualcomm Inc., electric-car maker Tesla Inc. and social media behemoth Facebook Inc. The EU Parliament will debate the outcome of the Brexit votes on Tuesday and there will be inflation data from Germany.
What We’ve Been Reading
This is what’s caught our eye over the last 24 hours
- Could tighter monetary policy spur more demand for Treasuries as a haven asset?
- Bulls are betting the market rally is going to continue and are piling into risky, small-cap stocks
- The changing communication strategies of central banks, featuring reggae and puppies. Puppies which may soon be eating crickets and fish heads.
- The tricky business of safeguarding one’s wealth in Russia
- The life-changing magic of cleaning up for Marie Kondo (at the bank)
- Neuroscientists have made a breakthrough in translating thoughts into speech
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