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.

Second Referendum

The team around Prime Minister Theresa May has pushed back against the notion they are warming to the U.K. holding a second referendum. May herself plans to tell Parliament today that it would be a breach of trust. She’s likely to face another barrage of criticism in the House of Commons and, very likely, more calls to hold a “People’s Vote.” May has returned from Brussels with little to show from the trip, so expect all the lambasting she receives to be about the same too. Watch for a reaction in U.K. stocks and the pound.

Housing Fears

The ongoing fear that the U.K. will leave the European Union without a deal in place is taking a heavy toll on the country’s housing market. Two survey published on Monday respectively showed asking prices dropping for a second consecutive month in December and that selling prices rose at the slowest annual pace in six and a half years in November. Beneath the surface and beyond the noise of Brexit, signs are also turning negative. Keep an eye on the homebuilder sector today.

Italy’s Concessions

The Italian government is set to trim its deficit target for 2019 in an attempt to get the European Commission to approve its proposals and bring an end to months of posturing on both sides that has caused turmoil in Italian bonds and banks. Deputy Prime Minister Matteo Salvini said the government had reached an agreement on “everything” but there are precious few details of what has been agreed, so until there is clarity don’t anticipate any let-up in volatility in Italian assets.

Power Grid Prices

After years of pressure from an activist investor, Swiss engineering group ABB Ltd. has agreed to sell its power grids business to Japan’s Hitachi Ltd. ABB in 2016 decided to hang on to the operation after a strategic review, only reverse the decision this year after the value of the business rebounded. The sale values the unit at $11 billion. We’ll have to see whether analysts think that looks like a good deal for ABB, though shareholders may well like the large portion of that money ABB is going to give back.

Non-Core Take-Out

A shareholder in Just Eat Plc, the U.K. take-out food aggregator, has called on the company to consider strategic alternatives for non-core assets it owns. The firm has already had a tough year as its plans to invest in its own fleet of drivers to deliver the food Brits order came under scrutiny, but this development adds a new layer to the equity story and demonstrates the disgruntlement felt by shareholders who had been on a good run with the fast-growing firm.

©2018 Bloomberg L.P.