* European shares little changed
* Carrefour (PA: CARR ) down 5% as Couche-Tard drops takeover plan
* Utilities among leading losers, tech up
* Wall Street closed for Martin Luther King day
Jan 18 - Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at email@example.com
STAY BULLISH BUT WATCH THOSE EARNINGS! (1222 GMT)
The earnings season is upon us and even though Q4 projections aren't exactly great and visibility on the profit outlook is low, equity markets remain near recent highs.
That most likely reflects expectations that the vaccine-driven recovery will gather steam throughout 2021, making up for the pain suffered at the turn of the year to fight the pandemic.
And while such expectations may be a matter of comfort, it also means that companies will have to deliver on earnings more than ever, not to disappoint investors who are already positioned for better times ahead.
"Liquidity was the key support of recovering share prices in 2020; earnings delivery will be needed for further equity upside in 2021," say Berenberg's Jonathan Stubbs and Edward Abbott.
That said and despite they think risks in the near term are "elevated" due to the restrictions, Berenberg analysts remain bullish -- their base case being for a further 10-15% of equity gains over the coming months.
LIFE AFTER MERKEL (1126 GMT)
Angela Merkel's Christian Democrats chose centrist Armin Laschet to lead the party as he positioned himself on Saturday as the man to heal divisions in the party and is now in pole position to become Germany's next chancellor in September. Merkel's 16 years leadership, investors are now wondering what's next, says UBS in a note. "Judging from client questions, the key concerns are about the future direction of fiscal policy, the prospects for further European integration and the speed of the green transition".
Deutsche Bank (DE: DBKGn ) expect policies to stay much of the same under Laschet's leadership.
"Being a unifying figure, people tend to underestimate him. Laschet pledges to stick to most of chancellor Merkel-s policies," DB says in a note to clients, adding that in a speech to the delegates over the weekend, Laschet suggested "more of the same" will come.
"Essentially focuses on the result, i.e. remaining in government and governing successfully".
But the new leader will likely pay "particular attention" to industrial policy and on modernising the country, the German bank also says.
In terms of relationship with the EU, "a critical, constructive attitude towards Europe is the most likely path ahead for any CDU/CSU led coalition government," Natixis analysts say.
Laschet beat arch-conservative Friedrich Merz in a ballot of CDU party delegates.
BUBBLE? NOT YET, BUT STAGE IS SET (1058 GMT)
You could be forgiven for thinking there's something rather fizzy about world financial markets right now.
About a quarter of all global bonds are trading in negative territory, indicating elevated prices. Tesla has a bigger market cap than all major listed automakers in Europe, Japan and the U.S. combined. First-day performance on U.S. IPOs averages 40%. Special-purpose acquisition companies (SPACs) have raised more than 70 billion in 2020, while Bitcoin has almost quadrupled in just three months.
These are some of the market observations UBS Global Wealth Management's CIO Mark Haefele made in his monthly letter to clients at the end of last week, while addressing the issue of bubbles.
You will be relieved to hear Haefele doesn't believe broad equity markets are in a bubble right now. But the preconditions for it exist - record low financing costs, new participants in markets, high savings, and low returns on traditional assets - all of which he says "create both the means and the desire to engage in speculative activity."
Still, he sees signs of "irrational exuberance" in the cryptocurrency markets and note that IPO and SPAC markets look hot. Government bonds can be considered a bubble by many metrics, Haefele notes, although he says it's one unlikely to burst due to policymaker support.
INVESTMENT BANKS: NO BONANZA IN 2021 (0956 GMT)
The investment banking boom that fed on last year's extremes is unlikely to repeat itself and even though January has started on a solid footing, it looks like the party of last year's bonanza is over.
"While we believe it is too early in the quarter to make a conclusion on Q1, banks generally highlighted that trading activity in Jan has started strongly but a normalization of IB revenues in 2021 is expected," said JPMorgan (NYSE: JPM ) analysts.
According to JPM, IB revenues in 2021 are expected to fall 18% versus last year, as you see in the table below, while against the more 'normal' 2019, they should see a gain
A CARREFOUR DOWNER AT THE OPEN (0851 GMT)
It was to be expected but the French government's resounding "non" to the Canadian takeover offer for Carrefour is taking its toll on the shares of the supermarket operator this morning.
Carrefour is the worst performing stock across the pan-European STOXX 600 with a fall of over 6%.
It's fair to say that this isn't doing much for the general mood which was already fairly lacklustre.
Half an hour into trading, most regional bourses are down between 0.1% and 0.5%.
Energy stocks are not surprisingly dragging the market due to retreating oil prices.
On the bright side, a rating upgrade from Goldman Sachs (NYSE: GS ) has given a boost to Infineon, up 3.4% and the rest of the tech sector which is up 0.9%.
Here's Carrefour share price going back down to where it was before Canada's Alimentation Couche-Tard's approach:
WALL OF DOUBTS (0812 GMT)
The narrative of the reflation trade lifting world markets seems to be fizzling out and much like (recently deceased) music producer Phil Spector's "Wall of Sound" that layered pop and classical instruments to create a lush overall sound, many risk-off noises are rising in the background.
China's economy roared ahead at a better-than-expected 2.3% last year and expanded in Q4 at 6.5%, while industrial output grew 7.3% in December. But if the data gave some legs to copper and aluminium prices and lifted Chinese markets, the surging virus caseload is tempering the cheer; even in China, 28 million people are under lockdown.
Nor has the data entirely dissipated the gloom from Friday's dismal U.S. retail sales figures, keeping U.S. and European equity futures in the red and the dollar just off one-month highs.
All that's taken U.S. 10-year yields US10YT=RR from 1.187% to 1.087%, while oil prices have fallen from 11-month highs hit last week.
It's a public holiday in the United States but there is no shortage of action elsewhere. In M&A news, Couche-Tard and Carrefour now plan to explore "partnership opportunities", Chrysler and PSA sealed a merger to create Stellantis, the world's fourth-largest auto maker while Dutch paintmaker Akzo Nobel bidding for Finnish rival Tikkurila.
Finally, quite a bit to chew on politically this week. Besides Joe's Biden's inauguration on Wednesday, Armin Laschet's election to lead Germany's main ruling party will be a relief to markets, given he is expected to continue Merkel's pro-European agenda.
Italy's ruling coalition faces two days of parliamentary votes that will decide whether it can cling to power. Even with the ECB standing behind Italy, government bond yields are inching higher in trepidation. Key developments that should provide more direction to markets on Monday: -Janet Yellen expected to affirm Biden doesn't want weaker dollar -White knight emerges in Suez/Veolia takeover battle -French major Total buys 20% stake in India's Adani (NS: APSE ) Green Energy -Trump administration notified Huawei suppliers, including chipmaker Intel (NASDAQ: INTC ), it is revoking certain licenses to sell to the company, Reuters reported. -Eurozone finmins meet to discuss global role of euro -Deliveroo has raised $180 million from existing investors, including Amazon (NASDAQ: AMZN ), valuing the business at more than $7 billion. -British telecoms operator BT is facing a claim for almost 600 million pounds ($800 million) lodged by a consumer campaign group, -Philly Fed non-manufacturing survey
(Julien Ponthus and Sujata Rao)
CHINA ISN'T ENOUGH (0637 GMT)
A better than expected Q4 for China's GDP lifted blue chips in Shanghai overnight but there's little chance that the optimism will travel as far as Europe.
Futures for the old continent are currently trading about 0.3% in the red and retreating oil prices show there is an overall risk-off mood at the moment.
No help will come from Wall Street today which is be closed for a holiday.
Not that the news flow is particularly good on that side of the Atlantic anyway: Friday's U.S. retail sales were disappointing, tensions run high ahead of Biden's inauguration and the pandemic is far from being under control.
https://tmsnrt.rs/38QPVjF IB 2021 revs estimates
https://tmsnrt.rs/2M4zVRW UBS bubble framework
https://tmsnrt.rs/39HlY4L base case
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