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:


Stocks sank, the oil price hurtled lower, corporate bond markets started to show real signs of stress and markets around the world shared in the misery. Given how ugly things have been at the start of the week, it’s possible stocks will take a breath on Wednesday. FTSE 100 futures at least are pointing to a marginally better open and the oil price has recovered a tiny amount of ground, though U.S. crude inventories data are due in the European afternoon, so no guarantees this will hold. Brace for another volatile day, not least because of the next two items.

Brexit Goes to Brussels

Theresa May is getting her skates on and heading to a meeting with European Commission President Jean-Claude Juncker in a bid to smooth out any areas of consternation in her Brexit plan in time for an upcoming EU summit. Any tangible signs that progress has been made could give the pound a big lift but equally, if the headlines flowing out indicate the EU is unwilling to budge, it could be a difficult day in U.K. stocks.

The Last Judgment

The day of reckoning is here. The European Commission will issue its opinion on the budgets of all EU member states but eyes are trained keenly on how harsh the language will be on Italy. European commissioners have already made clear Italy’s planned budget deficit for 2019 breaks EU fiscal rules, but the question is what actions will be taken to remedy that problem and, indeed, how recalcitrant Italy’s populist government will be in the face of any further criticism. Watch the country’s bonds and its banks for what promises to be a volatile day.

All About Chemicals

European chemicals took a beating on Tuesday, rocked by a profit warning from Germany’s Covestro AG, broker negativity on Evonik Industries AG and an earnings forecast miss from BASF SE. U.K.’s Johnson Matthey Plc takes the stage on Wednesday and watch for how its emission controls business is doing given the challenges faced by its car-making customers. A decent set of results might provide a little salve after a bruising session yesterday.

DIY & Beer

Kingfisher Plc’s results will be closely watched as a bellwether for how much money British and French homeowners are spending on sprucing up their abodes. For another state of the nation update, look to Marston’s Plc which should provide a decent picture of how much beer Britons have consumed in the past couple of months. Given all the white noise of Brexit turmoil swirling in the background, it’ll be interesting reading.

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