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:
The plot to oust Theresa May is faltering, with all indications pointing to the likelihood that the magic 48 number will not be hit on the letters calling for a vote of no-confidence. Keep watching developments and whether May surviving the backlash could lift the pound and maybe the mood in U.K. stock markets. Amid this Brexit-stained backdrop, a number of U.K. companies are due to update the market. Among them, lender CYBG Plc and budget airline EasyJet Plc are likely to be the most closely watched for updates on what the exit process is doing to business. Also note that Bank of England Governor Mark Carney is appearing before the Treasury Committee, another event with the potential to push the pound around.
Another ugly day for U.S. tech stocks on Monday, with the Nasdaq 100 dropping 3.3 percent. The FAANG giants slumped, semiconductors dropped and broadly anything in the tech or internet industries took a dive. I mean, Apple is nearing bear territory. Most of the names had been the darlings of the market in the first half, but after a dispiriting earnings season that failed to justify the lofty valuations these stocks had reached, the momentum in momentum stocks has turned to the dark side. Watch for this feeding into weaker sentiment both in European tech, which dropped itself on Monday, and in stocks where valuations are toppy.
Flying High or Low?
In addition to providing a little insight on Brexit impacts, EasyJet’s results will be interesting to watch in the wake of a chunky drop in the oil price in recent weeks. Huge capacity increases and concerns about fare growth still abound, but the other consistent reason for recent weakness in the sector has been the extra costs higher oil prices bring with it. Anything more sanguine from EasyJet on the outlook regarding fuel costs might give the sector a little lift.
Building in America
U.S. new home construction data are due in the European afternoon and carry the potential to disrupt the day for those building-products companies exposed to the American market. Note confidence among U.S. homebuilders dropped by the most since 2014 in November amid rising interest rates, according to a report on Monday. The likes of Ferguson Plc, Ashtead Group Plc and CRH Plc took a hit on Monday afternoon after the report, so if the data on Tuesday is bad too, that could compound the negativity.
Swiss hearing aid manufacturer Sonova Holding AG reported earnings early this morning in line with expectations, following a choppy last couple of months for the sector. A bunch of audio device components were included in a list of targets for U.S. tariffs on China back in September and Sonova and rivals took a battering in October after U.S. regulators approved the entry of loudspeaker company Bose Corp. into the market, so watch out for updates on these topics and read-across to peers. In listening of a different variety, keep an eye on Vivendi SA’s shares after pop star Taylor Swift, one of only a handful of names still able to sell millions of physical records, signed up to its Universal Music Group subsidiary.
©2018 Bloomberg L.P.