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…

Trade and the Shutdown

The U.S. and China’s trade meeting appears to have gone broadly well but the American side is now pushing for ways to ensure that China will deliver on its commitments under any deal the two eventually come to. Markets have been gaining amid positive signs from the talks -- including oil hitting a bull market on trade optimism and OPEC reassurance, though it’s dipping a little this morning -- but until a deal is actually done, some jitters are likely to remain. The same can be said of the ongoing shutdown of the U.S. government, particularly after President Donald Trump stormed out of a meeting with congressional leaders on Wednesday calling it a ``waste of time.’’ Two risks that look set to be in place for some time yet, it would seem.

Plan B Returns

U.K. Prime Minister Theresa May is said to be openly contemplating a “plan B’’ to her current Brexit proposals amid growing signs lawmakers will reject the deal when it is put to a vote next week and after a series of defeats in Commons has left parliament with yet further control over the process. Rolls-Royce Motor Cars warned about the dangers its U.K. plants face from border delays and French plane manufacturer Airbus SE called on ministers to get on with the job, which at least makes a welcome change from the slew of U.K. companies that have reported this week who avoided saying the “B” word.

The Fed

All the soothing messages that Fed Chairman Jerome Powell gave last week were fully in evidence in minutes from the central bank’s December meeting, so the question now being raised is why this more dovish stance and the potential to hold off on the hiking cycle wasn’t made clear then. Still, ultimately the same message that Powell gave last week and which has helped markets to get off to a positive start to 2019 are all in place, so while those aforementioned risks around trade, the shutdown and Brexit are all still very much in evidence, rate hike concerns can ease.

Britain’s High Street

We’ve already had updates from scandal-hit fashion retailers, vegan sausage-roll makers and two of the country’s largest supermarket chains, but after Thursday the picture of how Christmas went for the U.K. high street will be nearly complete. Two big bellwethers, Tesco Plc and Marks & Spencer Group Plc, will round out most of the picture for food and clothing; struggling Debenhams Plc will do the same for department stores, and Card Factory Plc will indicate how many cards and how much gift wrap were sold. So far, you can categorize Christmas for U.K. retailers under the “not as bad as it could have been” section. Today will show clearly the winners and losers.

Planes, Cars and Beer

A few more areas to keep a watch in the European session today. Plane manufacturer Airbus said its total orders declined last year, meaning its arch-rival Boeing Co. takes top spot in the 2018 rankings, which could impact the European manufacturer after its stock rose on Wednesday and potentially the shares of its suppliers. In the autos space, Fiat Chrysler Automobiles NV is said to be set to settle a civil suit in the U.S. over diesel emissions and Volkswagen AG’s board is reportedly deliberating whether to broaden its tie-up with U.S. carmaker Ford Motor Co. And Modelo beer maker Constellation Brands Inc. dropped in the U.S. after trimming its profit guidance and indicating a slowdown in its beer business, which could weigh on its European brewing rivals.

To contact the editor responsible for this story: Tom Lavell at tlavell@bloomberg.net

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