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 U.K. retail bellwethers, the U.S. shutdown and the importance of Apple.

Apple Crumbles

The supply chain for Apple Inc. is a sub-sector in and of itself, and one that will likely take a battering on Thursday after the U.S. technology giant cut its revenue outlook for the first time in two decades. The tech giant has seen fewer upgrades to new iPhones than expected, is suffering against weakness in China’s economy and has seen supply constraints of new models of its Apple Watch, iPad Pro tablets and AirPod earphones. All in all, it paints a bleak picture and is not only likely to hits its semiconductor suppliers but could feed into a pretty poor sentiment across European technology today.

Thank U, Next

The U.K. retail sector had a pretty woeful end to the year with dire warnings about the state of the market from the likes of Asos Plc and Sports Direct International Plc. Next Plc, a high-street bellwether, will give the first glimpse of how the industry fared over the extremely important Christmas months. Keep an eye on the level of discounting, how much inventory is left over and the group’s outlook for the U.K. for a read-across into the likes of Marks & Spencer Group Plc and Primark-parent Associated British Foods Plc.

Communication Breakdown

U.S. Congressional leaders were unable to strike a deal to end a partial shutdown of the federal government on Wednesday, with new negotiations now offered by President Donald Trump for Friday. Unsurprisingly, things got somewhat contentious, according to accounts from people familiar with the matter, so the prospects for an agreement being reached later in the week still appear uncertain. Not a major risk for markets, but adding another element of uncertainty about the political situation in the U.S. isn’t helping overall sentiment, so add this to the list of overhangs to consider as the year gets underway.

Volatile Crude

Such is the importance of Apple to global markets that a reversal in an oil rally seen on Wednesday was blamed on the technology giant’s warning hitting global risk appetite. Whatever the reason, oil has started 2019 in precisely the same, highly volatile fashion it closed out last year, and this is likely to remain the case ahead of U.S. inventory data due on Friday and amid reports that OPEC output dropped the most in almost two years in December as the cartel works to underpin prices. No reason to anticipate any let up in this volatility just yet.

Transfer Window

There are not many listed soccer clubs in the world but keep an eye on those which have gone public for investor reaction to any deals they pursue in the January transfer window. Germany’s Borussia Dortmund GmbH & Co KGaA jumped on Wednesday after it agreed to sell Christian Pulisic to England’s Chelsea FC for 64 million euros, enough to drive an upgrade to its financial guidance. In Italy, Juventus Football Club SpA jumped in part thanks to its solid position at the top of Serie A but also amid speculation it is on the verge of signing Arsenal Holdings Plc’s Aaron Ramsey. Keep an eye on others, like AFC Ajax NV or U.S.-listed Manchester United Plc, should they too become entangled in fevered transfer speculation.

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