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. Please note, this column will be on hiatus from Dec. 24 through Jan. 1 and will resume publication on January 2.

Secret Plan B

U.K. Prime Minister Theresa May’s team, behind closed doors, is discussing a whole host of options should she fail to persuade Parliament to approve her Brexit deal, Bloomberg News reported. One senior government official confirmed what the market has thought to be apparent for some time now, that the idea of sending the vote back to the people is gaining ground. Brexit is likely to take its spot as the uncomfortable conversation of choice for families gathering around their Christmas dinners across Britain and such uncertainty will mean it continues to underlie the picture for U.K. stocks too, which could remain very choppy through the low-liquidity holiday season.

Mad Dog Exits

Similarly, there is no sign of a let up in turmoil for the U.S. government. After President Donald Trump’s announcement this week that the country will pull its troops out of Syria, Defense Secretary James Mattis resigned. Ripples from his departure – Mattis is one of the last remaining names from the Trump administration’s original line-up – will linger until a replacement is named. But that’s not the only sign of upheaval. A partial shutdown of the government is possible due to an ongoing dispute about providing funding for Trump’s wall with Mexico. So you can head into the festive season with much of the political to ponder on both sides of the pond.

Annus Horribilis

A very bad year just got worse for Denmark’s Danske Bank A/S. Having already seen its market value drop about 47 percent in 2018 after it was at the center of a money laundering scandal, the group is likely to cap the year off with another dip after trimming its guidance for the year. While the laundering scandals have dominated the story, this warning has mainly been driven by weaker conditions in the market in the fourth quarter, so it could even sour the mood across Europe’s banking sector.

Crude Christmas Present?

The oil price continues to face downward pressure and eyes will be trained on Friday on OPEC and its allies as they pledge to provide more clarity on exactly how much output they intend to cut. Crude prices have sunk in recent months on concern that the output cuts OPEC+ is planning won’t be enough to offset higher supply from the U.S., so investors with their money in oil stocks will be wishing for a Christmas present from Saudi Arabia, Russia and co. However, note the correlation of crude prices with U.S. stock prices, indicating that economic confidence is an equally big factor for oil stocks and one unlikely to be brought back to health purely by output cuts.

Kaepernick Payoff

Nike Inc. jumped in late trading on Thursday, potentially providing a little festive boost for shares in its European rivals Adidas AG and Puma SE. Second-quarter results for Nike sprinted past expectations and the beat was importantly driven by its two most important regions, North America and China. The report was also the first to include the impact of the company’s controversial advertising campaign with Colin Kaepernick, the NFL quarterback turned activist. The company, having initially taken some flack for the move, declared its success.

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net

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