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 concerns, more Brexit negotiations and deteriorating relationships in Europe. Please note, this column will be renamed “Five Things You Need to Know to Start Your Day” starting on Monday Feb. 11.

Uncertainty

Asian stocks are down, taking their cue from a red day in the U.S., as the uncertainty around the future of trade relations between the U.S. and China comes back to the fore, spoiling the mood that had led to the recent rally in markets. U.S. President Donald Trump said he doesn’t see a meeting with Chinese Premier Xi Jinping taking place before the temporary trade truce between the pair expires on March 1. And the U.S. warned of countermeasures towards any country that allows Chinese infrastructure to be used in critical projects. Trade concerns, it seems, are back with a vengeance, if they ever went away. 

May Goes to Dublin

The European Union rebuffed the demands brought by U.K. Prime Minister Theresa May to make changes to the Brexit proposal but did at least agree to hold further negotiations. Exporters to Asia are feeling the pain as the deadline approaches, European fishermen are making preparations and concerns have been raised about fake drugs under a no-deal scenario. Around the rest of the world, the prevailing feeling is one of bemusement and incredulity about the state the U.K. finds itself in.

Europe’s Troubles

The rough patch of data from Europe continued apace on Thursday, adding to the concerns about global growth. Political strife is rife too. France recalled its ambassador from Italy on Thursday, bringing relations between the two to a low and raising concerns for industries like shipbuilding and trains. Also,  the scandal revolving around President Emmanuel Macron’s bodyguard has resurfaced just as he attempts take back the focus of the country after the turmoil caused by the Yellow Vest protests, which are also at the center of the spat with Italy.

Handbags and Chemicals

Luxury leather goods giant Hermes International will report following a wave of good numbers from its rivals, though a little shade was thrown on that by the Tapestry Inc. warning. Also keep an eye on the updates from chemicals firms Yara International ASA and Umicore SA, a key sector to watch amid the trade tensions between the U.S. and China given its position supplying wares to sectors like autos and semiconductors. Watch too for anything further on the U.K. government’s plans to trim its stake in Royal Bank of Scotland Group Plc following this Bloomberg scoop on Thursday.

Coming Up…

Economic data from Germany, and indeed the rest of the euro area, this week have been pretty lousy so the focus on the export numbers due to be published today will be even keener than normal. Russia will announce its interest rate decision, with economists expecting it will hold but potentially hint at tighter times to come. Industrial production data from France and Italy is due and the Baker Hughes oil rig count will arrive in the afternoon.

What We’ve Been Reading

This is what’s caught our eye over the past 24 hours

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