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 the latest round of Brexit votes, European earnings season heating up and tensions between the U.S. and China.
Another Big Brexit Day
U.K. lawmakers are set to vote on a series of amendments to Prime Minister Theresa May’s Brexit plans that threaten to take the power away from her on the next steps. May supports amendments on the backstop, the euroskeptic wing of the Tories don’t intend to vote for any amendments, the Labour Party has yet to decide what it will do. Be assured, eyes will be trained yet again on the pound and U.K. stocks. Apparently, Brexit could lead to more deaths, but at least Brits will be able to eat.
Earnings Kick Into Gear
There will be busier days to come but Tuesday marks the opening salvo for the European earnings season. German software behemoth SAP SE is the biggest and most important to watch for the tone of what’s to come, particularly after the Monday afternoon slump for European tech stocks caused by the warning from U.S. chipmaker Nvidia Corp. and the disappointment from Caterpillar Inc. SAP looks in line at first glance, as does Dutch health-tech company Royal Philips NV. Watch numbers from U.K. stockbroker Hargreaves Lansdown Plc and postal service operator Royal Mail Plc for a little insight into the state of the Brexit-clouded British economy.
The U.S. announced criminal charges against China's Huawei Technologies Co. Add this to the news that the World Trade Organization is set to investigate the tariffs the U.S. imposed on China and you have a recipe for mounting tensions between two sides due to re-enter closely watched trade talks this week. In Europe, where governments are debating whether to bar Huawei from taking part in installing 5G equipment, Deutsche Telekom AG warned that doing so would set Europe back in the race to harness the new mobile technology.
Commodities on Different Paths
Monday’s markets were characterized by diverging fortunes in commodities. Miners were given a boost by concerns about iron ore supply disruptions emanating from the dam collapse in Brazil, while oil companies led stock declines as crude prices snapped a three-day winning streak in a good year thus far after the U.S. rig count rose. Oil futures have resumed their rally today after the U.S. imposed new sanctions on Venezuela’s national oil company, so watch crude producers and oilfield-equipment companies.
It may not be the largest company in the world anymore but Apple Inc. remains a redoubtable name to watch for its supply chain and, after Nvidia and SAP, the wider tech sector. It reports after the U.S. bell and after customers discovered a bug that lets people listen in on other users via the FaceTime app. LVMH SE, the French luxury giant, will also report after the European close alongside Italy’s Salvatore Ferragamo SpA for a peek into the outlook for all things expensive. U.S. and French consumer confidence data is coming and markets will continue positioning ahead of the Federal Reserve decision on Wednesday.
What We’ve Been Reading
This is what’s caught our eye over the last 24 hours
- Stock investors sensitive to volatility stand ready to pump money into stocks, if things stay calm
- Deutsche Bank and UBS have hit a roadblock in trying to unload $1.2 billion of buyout loans
- Japan is starting to get serious about the idea of flying cars
- Germany is proceeding in a very orderly fashion to find its first legal marijuana growers
- Big companies are making it clear: they want clean power. They could wash it down with clean-power beer
- China created nearly two new tech unicorns a week last year
- The personal toll that being a whistle blower can take
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