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 Fed espousing the virtues of patience, Brexit heading towards a showdown and a slew of big earnings reports.

Patience

The Federal Reserve pivoted away from its prior bias towards hiking rates, saying it’s going to take a patient stance and be flexible on the path for reducing its balance sheet. The dovish tilt doused bets on rate hikes and increased expectations of a cut in 2020. U.S. stocks bounced on the announcement, Treasury yields dipped and the dollar sold off. Asian stocks rose on the news too and European futures are pointing higher, helped too by oil heading for its best month since 2015.

No Concession

The European Union is prepared to take the U.K. down to a high-stakes, eleventh-hour summit on Brexit, according to diplomats. U.K. Prime Minister Theresa May got her mandate to go back to Brussels to renegotiate, but as the EU had been saying for some time, it doesn’t have any interest in reopening what’s already been proposed. Still, May could capitalize on splits in the Labour Party to get a form of her plans through Parliament. Until then, ponder the funding gap U.K. projects could face and note the near-50 percent fall in investment in Britain’s auto industry last year, all blamed on Brexit.

Bumper Earnings

Rest assured, earnings season is getting into full swing. A bunch of bellwethers are up the plate on Thursday, with Swiss drugmaker Roche Holding AG and Finnish network-equipment firm Nokia Oyj already out and numbers still to come from oil major Royal Dutch Shell Plc, spirits maker Diageo Plc, consumer goods giant Unilever and telecoms house BT Group Plc. After the deluge, investors will be able to start drawing some early conclusions about the prevailing tone of European earnings thus far.

Tech Signals

Facebook Inc.’s revenue beat caused its stock to surge, adding to an increasingly decent run of results from the U.S. tech majors after reassuring numbers from Apple Inc. That could underpin a solid day for European tech, helped too by a supportive update from chipmaker Qualcomm Inc. Two caveats, however. Microsoft Corp.’s results were broadly in line but concerns about cloud momentum sank its shares, while Samsung Electronics Co. said it will trim spending this year to focus on the profitability of its memory-chip business. 

Coming up…

The theme of mega-cap earnings continues apace. Amazon.com Inc. will be the main event after the European bell but during the session there will be General Electric Co., tobacco giant Altria Group Inc. and another bellwether for the state of trade in United Parcel Service Inc. Watch out too for comments from three separate European Central Bank speakers in Yves Mersch, Benoit Coeure and Jens Weidmann, coming as economic data continues to disappoint and point to a dovish shift by the ECB. Some more of that data is also on the slate, with euro area GDP numbers due. And remember, the latest round of U.S.-China trade talks conclude today.

What We’ve Been Reading

This is what’s caught our eye over the last 24 hours

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