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Here's What to Watch in European Stocks This Morning

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:

Dour Data

China’s manufacturing purchasing managers index (PMI) for October fell the most in eight months, and the non-manufacturing gauge also slumped. The “deep undershoot” highlights the risks of an accelerated slowdown in the country, just as trade-war tensions look likely to start impacting, Bloomberg Intelligence said. China’s strength is key to many European sectors, particularly mining, technology and luxury goods. In Europe later, watch for inflation numbers, which are a key indicator for policymakers at the European Central Bank.

Retail Radar

Investors in U.K. high-street retailers will get a sense of recent trading conditions when Next Plc, a bellwether for the industry, reports before the open in London. In-store like-for-like sales fell for the eighth consecutive month in September, according to industry data tracker BDO, but cooler temperatures since the summer heatwave may have spurred better sales in recent weeks, analysts say. Next’s update could have a read-across for store rivals like Marks & Spencer Group Plc, while others like Asos Plc and Boohoo Group Plc might be impacted by its online figures.

Pharma Fever

Earnings reports from two pharmaceutical giants could provide a reference point for U.S.-exposed companies grappling with intense pricing pressures. President Donald Trump has vowed to slash the prices paid for drugs covered under Medicare, just as the industry is awash with new releases of copycat treatments known as generics. French insulin maker Sanofi reports before the open, while U.K. asthma-treatment firm GlaxoSmithKline Plc is due to release numbers at midday London time. Attention deficit hyperactivity disorder treatment producer Shire Plc, and another insulin heavyweight, Denmark’s Novo Nordisk A/S, follow later this week.

One More FAANG

Facebook Inc.’s consensus-beating quarterly profit gave the U.S. tech sector another boost, following a small rebound in the Nasdaq 100 on Tuesday. Despite recent scandals involving election interference and concern over fake news, it also added more users. EBay Inc.’s numbers also topped Wall Street consensus, and its bullish outlook calmed some fears over slowing sales. Samsung Electronics Co. Ltd. beat quarterly consensus, while it attempted to brush aside the recent chip industry downturn to emphasize long-term demand from 5G, the Internet of Things and other future technologies. The shares slipped as analysts sought further reassurances.

Phones and Football

Spanish telecoms firm Telefonica SA, which operates the O2 mobile network in the U.K., reports before the open in Madrid. Analysts expect the company to indicate growing customer numbers in its home country, in part due to a strategy of targeting of the nation’s soccer fans. However, the contribution to group revenue from Argentina and Brazil may have been reduced by their weakened currencies. Shares of Vodafone Group Plc, which also has a big customer base in Spain, may also react.

To contact the reporter on this story: Joe Easton in London at jeaston7@bloomberg.net

To contact the editors responsible for this story: Beth Mellor at bmellor@bloomberg.net, Tom Lavell

©2018 Bloomberg L.P.