Here’s What to Watch in European Stocks This Morning
(Bloomberg) -- Good morning. Here’s what we’re watching ahead of the market open in Europe, including another no-confidence motion in the U.K., falling oil and an under-fire Fed.
Another week, another no-confidence motion for the U.K. government to contend with. This time it’s been proposed by Jeremy Corbyn, leader of the opposition Labour Party, only hours after he declined to propose such a motion in the House of Commons. It’s worth noting that he’s talking about a motion of no-confidence in Prime Minister Theresa May, not in the government. As such, if it passes, it wouldn’t trigger a new general election. It probably won’t pass and the government won’t be allowing time for the vote anyway. Still, it provides yet another reason for investors in U.K. assets to remain on tenterhooks.
The oil price took another move lower as a new report indicating expanding stockpiles in the U.S. reignited concerns about a supply glut in the market. This nervousness looks unlikely to end in 2018 or at least until there is some clarity about to what extent OPEC countries and Russia will trim production to underpin prices, or indeed how far they will go to meet the promises set out. Until the fundamentals start to show the signs needed for crude to rise, anticipate that oil stocks will remain under pressure.
With the U.S. Federal Reserve set to begin another pivotal policy meeting on Tuesday, before announcing its rate decision on Wednesday, President Donald Trump barreled back into the debate about the hiking cycle. Trump said it was ``incredible’’ the Fed would even consider another interest rate hike given the ``very strong dollar and virtually no inflation,’’ not to mention that the ``world is blowing up around us.’’ Trump’s broadside aside, markets may remain in a holding pattern for the next two days until the Fed announces its decision.
Some good news for European software stocks heading into the open after expectation-busting numbers overnight from U.S. firms Oracle Corp. and Red Hat Inc. Oracle is a bellwether for the industry and its forecast for stronger sales growth as it transitions over to cloud services should have a positive read-across for the likes of Germany’s SAP SE. Red Hat, meanwhile, should also provide a little boost for enterprise software names like Micro Focus International Plc after its third-quarter earnings outpaced analyst consensus.
The company with one of the worst-performing stocks in Europe this year will provide an update after yet another turbulent month. Indivior Plc, which makes opioid dependence treatment Suboxone Film, has suffered this year as generic versions of its key medicine come closer to the market. This month alone it has seen a U.S. court reject the launch of a competitor and today’s update should contain some more information on how the firm is going to cope when these cheaper alternatives finally are approved. Indivior will come into the update having fallen 77 percent in 2018.
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