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:

‘Tariff Man’

The U.S. side has been fairly active since the G-20 summit in talking up a potential trade deal with China. President Donald Trump, while also describing himself as a “tariff man,” said a deal “probably will” get done. U.S. markets, however, plunged amid increasing skepticism about Trump’s claims and a variety of other concerns. But now China has said the talks were positive and it will quickly implement any trade agreements it reaches, which might have been the confirmation markets wanted. Watch for anything further on trade in the European session, noting the U.S. will be closed.

‘Plan B’

The twists and turns are coming thick and fast. The European court ruling that the U.K. can unilaterally withdraw its Article 50 declaration to leave the European Union opens a whole new avenue in Prime Minister Theresa May’s fight to get her deal through parliament. So far, it’s a fight she’s comprehensively losing. May was defeated in three key votes on Tuesday, one of which will give parliament the potential to decide on a “plan B” should her Brexit proposal be voted down, as is widely anticipated. It’s hard your eyes away from the saga but do keep watch on the still very volatile pound and on U.K. stocks.

Index Changes

U.K. stock market nerds will be glued to screens to see which companies are to be promoted and demoted from the FTSE 100 and FTSE 250 benchmark indexes. The indicative changes were released on Tuesday, but there are still a few names in close contention. For example, watch engineer Spirax-Sarco Engineering Plc which, if it has a good day on Wednesday, could end up making its way into the FTSE 100, possibly at the expense of property-listings site Rightmove Plc or takeaway-food aggregator Just Eat Plc.

Airline Industry

International Consolidated Airlines Group SA, the owner of British Airways and Iberia, will issue a trading update which should provide clues on how well both long-haul and short-haul flights are faring, given that it also owns the Vueling and Aer Lingus lines. Spare a thought too for package-holidays scion Thomas Cook Group Plc, which has seen its shares hammered recently and is now reportedly having to reassure shareholders it has no plans to raise new equity. Incidentally, it will be one of the names relegated from the FTSE 250 this month.

Italian ‘Follies’

Italian Finance Minister Giovanni Tria is the subject of yet further speculation about his future in the country’s press this morning, with Corriere della Sera saying he is “more tempted” to resign than before following the showdown between Italy and the European Commission on the country’s budget plans. He’s got plenty on his plate, for sure. Perhaps looming equally large is that Italy could soon be dealing with its first recession in five years, in part because of the damage its budget battles are having. Keep watch on Italian bonds and Italian banks, as always.

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