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, including a possible intervention by Trump, confidence in May and bank buybacks.

Trump Intervention

Optimism about the future of U.S.-China trade relations sent European stocks higher on Tuesday. Rising Asian stocks and European futures in the green indicate a similar reaction today. U.S. President Donald Trump said he would intervene in efforts to extradite arrested Huawei Technologies Ltd. CFO Meng Wanzhou if it meant it helped him to secure a trade deal with China. This commitment to finding agreement with China could help those stocks that benefited yesterday, including miners, construction firms, automakers and semiconductor names.

Confidence

Theresa May spent much of yesterday touring European leaders in an attempt to secure at least some concessions that could help her get her Brexit deal through Parliament. The European Union is showing no sign it will budge. Back at home, the situation for the prime minister looks even more dire. Growing media reports suggest lawmakers in her own Conservative Party are on the brink of forcing a confidence vote on her leadership. Expect Brexit-related uncertainty to continue in U.K. stocks.

Italy’s Budget

Italian Prime Minister Giuseppe Conte is due to meet with European Commission President Jean-Claude Juncker, so one can probably be sure that more headlines will flow today from both sides about the tweaked budget proposals Italy is set to bring. Reports in the Italian press this morning suggest Italy will seek a budget deficit target for 2019 just above 2%, so now we’ll have to wait to see if that is sufficient for the EU to let the plans through.

Shopping and Cigarettes

Spanish clothing giant Inditex, U.K. electricals retailer Dixons Carphone and fashion retailer Superdry Plc will all update, providing a little insight into each of their respective corners of the retail world. Also watch British American Tobacco Plc and particularly its ambitions beyond cigarettes. Vaping and other alternatives are increasingly the focus for all the groups in its industry, so watch for updates on how much investment is being pushed in this direction and how those units are doing right now.

Buybacks

Credit Suisse Group AG is holding an investor day and all eyes are on the capital returns. Headlines moving this morning indicate the group plans to buy back up to 3 billion Swiss francs in shares in 2019 and 2020 and it plans to increase its dividend from 2019 onward. The question will be whether this is enough to please investors after a huge restructuring the bank has gone through in the past three years, but also watch for any read-across into other banking names where capital returns are the key to the investment story.

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