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 setting up for a Hail Mary on Brexit and a geopolitical blitz from the U.S. president.
To The Wire
It won’t please the business community --despite the growing inevitability of this outcome since the U.K.’s Parliament started rejecting proposed Brexit deals -- but the British government thinks the Brexit talks are going down the wire. That will increase the uncertainty that’s already caused Japan’s Nissan Motor Co. to cancel plans to build a new SUV at its plant in the northeast of England, not to mention the jitters that underpin every day for U.K. stocks. Sterling traders, meanwhile, are remarkably zen about the whole thing.
Last week's U.S.-China trade talks seem to have gone well, but several former U.S. officials think the tariffs will stay in place to make sure China sticks to the script. Beyond trade, the U.S. has been very geopolitically active. In a wide-ranging, pre-Super Bowl interview with CBS, President Donald Trump said he is inclined to keep a presence in Iraq in order to “watch” Iran from nearby. Trump also said he was confident a transition of power was happening in battered Venezuela, where the embattled but resisting president is struggling to get gold out of the country and where his rival is talking to China.
Bond markets are looking ever more convinced that the European Central Bank will not lift rates until the middle of 2020, having previously been pricing in a rise this year. That’s spurring a rally in European bonds across the board or, as one strategist describes it, “a yield-grab environment.” Elsewhere, Federal Reserve Bank of Minneapolis President Neel Kashkari affirmed the central bank’s dovish shift, saying Chairman Jerome Powell is coming around to a “wait-and-see” mode on hiking rates.
All That Glitters
The mining industry will meet in Cape Town, South Africa, this week and after years being the unloved corner of the stock market, gold miners are back in vogue. The return of M&A has created excitement and the precious metal retaking its place as a haven from stormy markets, as evidenced by at least one wealth fund, has put the segment back in focus. With the State of the Union address from President Trump ahead on Tuesday and the potential for trade war-sensitive miners to move on what Trump says, keep watching the gold space.
It’s the lunar new year so many Asian markets will be either closed or partially closed this week, though the ones that are open rose on Monday. In Europe, inflation numbers from a newly in-recession Italy will be on the way, along with construction data from the U.K. After the close in the U.S. we’ll get the last of the major tech firms to update with Google parent Alphabet Inc. And watch too for a hearing at the European Parliament focused on one of last week’s most prominent stocks, Deutsche Bank AG.
What We’ve Been Reading
This is what’s caught our eye over the weekend
- The dollar drag may have caught some companies off-guard and more may follow
- The dovish pivot by the Fed may mean investors have to recalibrate where we are in the cycle
- FinTech eventgoers in Paris say crypto is over just as crypto investors are finding ways to play it safe
- As far as the global crude market is concerned, America is producing the wrong kind of oil
- It’s an election year in Argentina and its people are not happy with the state of the nation
- On the Silicon Valley-ization of Atlanta, which just played host to the Super Bowl
- A company claimed to have found a complete cure for cancer. The claim is totally bogus
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