Live Markets: Delta plus: a new comer to the UK's worry list

BACHEM HOLDING AG

19/10/2021 10:10

* European shares up 0.1%
    * Eyes on Q3 results
    * Supply chain issues overshadow Ericsson beat 
    * Asian shares track Wall Street higher

    Oct 19 - Welcome to the home for real-time coverage of
markets brought to you by Reuters reporters. You can share your
thoughts with us at markets.research@thomsonreuters.com 
    
    
    DELTA PLUS: A NEW COMER TO THE UK'S WORRY LIST (0910 GMT) 
    If UK investors were to write up a worry list, it would be a
pretty long one.
    Energy prices are surging, post-Brexit tensions are creeping
up again, the BoE seems set to tighten, there's plenty of staff
shortages, notably for lorry drivers and supply chain issues and
production bottlenecks are all over the news. 
    But there's been a recent addition: delta plus spreading in
the UK, courtesy of the COVID-19 Delta variant. 
    While many strategists believed Britain's swift vaccine roll
out would deliver the country a decisive edge in 2021, UK
infection numbers now dwarf western European countries and have
risen more 60% in the last month. 
    This winter may very well be "challenging", the UK
government warned.      
    The country just reported 49,156 new infections, the highest
number since July and scientists are struggling to put the
finger on the exact cause of the surge. 
    There's plenty of factors: low levels of mask wearing, the
fact that the immunity provided by vaccine wanes over time, a
slow roll out for teenagers spreading infections in schools, 
Britons eagerly socialising indoor again... and possibly delta
plus. 
    Deutsche Bank's Jim Reid noted in his morning note the call
on twitter of a former U.S. FDA Commissioner, to quickly look
into delta plus.
    "We need urgent research to figure out if this delta plus is
more transmissible, has partial immune evasion?", Scott Gottlieb
wrote on the social media on Sunday. 
    While Gottlieb and other scientists believe there is no
cause for immediate concern, delta plus is starting to make its
way to top news and to investors' worry list. 
    
    Some reading: 
    Britain reports highest number of COVID-19 cases since
mid-July  urn:newsml:reuters.com:*:nL8N2RE4ZA
    Children fuel English COVID case rise after slow vaccine
start  urn:newsml:reuters.com:*:nL8N2RC0B3
             
    (Julien Ponthus) 
    *****
           
    
    STOXX LACKS CONVICTION (0752 GMT)
    European shares started trading on Tuesday with no big moves
as investors tread cautiously amid signs that supply chain
issues and inflation pressures could dent company profits.
 urn:newsml:reuters.com:*:nL8N2RE3OI
    Ericsson  ERICb.ST  was a top loser, confounding earlier
calls for a positive start, after the telecom gear maker warned
of supply chain disruptions, overshadowing a profit beat.
    Despite Ericsson's weakness, tech  .SX8P  was nevertheless
among the top sectoral gainers, up 0.7%, tracking gains in its
global peers, while basic resources  .SXDP  rose 0.9%, helped by
a softer dollar.
    Elsewhere, a capital increase penalised biotech supplier
Bachem  BANB.S , sending its shares down 7% to the bottom of the
STOXX. 
    The STOXX was last up 0.1%. 
    
    (Danilo Masoni)
    *****
    
    
    FAST AND FURIOUS (0659 GMT)
    It took two weeks for UK money markets to go from expecting
no interest rate rises this year to betting on a cumulative 35
basis-point moves in November and December. But such bets are
proliferating almost everywhere, rate-sensitive short-dated bond
yields are rising and bond curves are flattening -- the U.S.
2-10 curve for instance has flattened 12 bps in a week.
    Besides Britain, some are placing bets on a September 2022
Fed rate hike; a month ago, no move was predicted before 2023.
Earlier on Tuesday, Australia's central bank was at pains --
again -- to stress it did not plan interest rate rises before
2024, yet that hasn't budge money markets from pricing a
late-2022 move.
    So, is it justified? Growth is clearly wobbling, especially
in China where Q3 GDP slowed to 4.9% while Monday data showed
U.S. industrial production shrank 1.3% month-on-month in
September. 
    Inflation is less transitory than anticipated, yet raising
rates probably won't fix the supply-side glitches that are
driving up prices and curbing output.
    Perhaps that's why bonds have not built on the recent moves,
with yields lower today and the dollar slipping to three-week
lows. That's cheered markets, especially on top of robust
earnings so far in the Q3 season and equity futures are implying
firmer New York and European sessions, following gains across
Asia. 
    Another piece of good news -- Chinese developers Sunac and
Kaisa made coupon payments, while Evergrande may also meet an
onshore bond coupon due on Tuesday  urn:newsml:reuters.com:*:nL4N2RF0M0.
    What's ahead today? A raft of Fed and ECB policymakers,
another airing for Bank of England governor Andrew Bailey and of
course a slew of earnings, including from a FAANG -- Netflix.   
    Key developments that should provide more direction to
markets on Tuesday: 
-Morrisons investors set to rubber stamp $10 bln CD&R takeover
 urn:newsml:reuters.com:*:nL8N2RB4UL
-UK global investment summit, looking at green finance,
technology, life sciences 
- Bitcoin a whisker off April 2021 record high
- ECB speakers: Chief economist Philip Lane, board members Fabio
Panetta and Frank Elderson
-Fed speakers: San Francisco Fed President Mary Daly; Atlanta
Fed President Raphael Bostic; Philadelphia Fed President Patrick
Harker
-Bank of England Governor Andrew Bailey
-Emerging markets: Indonesia seen holding rates, Hungary to hike
15 bps 
-European earnings: Unilever, Deutsche Boerse 
-U.S. earnings: BNY Mellon, Halliburton, Proctor & Gamble,
Johnson& Johnson, Netflix
    
    (Sujata Rao)
    *****
    
    
    EUROPE EDGES UP (0619 GMT)
    European shares look set to open above parity this morning
following a big bounce in Asia and a strong close on Wall Street
overnight, and as oil prices stabilise near multi-year peaks. 
    Needless to say the focus is on the third-quarter earning
season and results so far this morning don't look bad, even
though investors are wary price pressures and supply chain
problems could start to undermine profits.  urn:newsml:reuters.com:*:nL8N2RE3OI
    Here are some of the main headlines:
    Ericsson profit beats expectations on 5G demand despite
China setback  urn:newsml:reuters.com:*:nL8N2RF0KD
    Food group Danone keeps 2021 guidance in spite of inflation
pressures  urn:newsml:reuters.com:*:nL8N2RF0PF
    Tele2 core profit matches market forecasts  urn:newsml:reuters.com:*:nL8N2RE34R
    BHP iron ore output drops 5% on maintenance work, labour
crunch  urn:newsml:reuters.com:*:nL4N2RE48B
    Futures on the Euro STOXX 50 and FTSE 100 indices were last
both up more than 0.1%. U.S. stock futures also edged up.
           
    (Danilo Masoni)
    ***** 

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