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BBVA - Banco Bilbao Vizcaya Argentaria SA News Story

$5.72 0.2  2.9%

Last Trade - 05/03/21

Large Cap
Market Cap £26.78bn
Enterprise Value £20.97bn
Revenue £21.74bn
Position in Universe 326th / 6646

LIVE MARKETS-"We remain dollar bears"

Thu 21st January, 2021 1:19pm
* European shares up 0.4% * U.S. stimulus bets keep mood positive * Tech leads gainers, up 1.9% * ECB keeps stimulus unchanged * Wall Street seen edging higher Jan 21 - Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at "WE REMAIN DOLLAR BEARS" (1304 GMT) After being on downward path since March the dollar has regained some mojo this month. That has somewhat challenged the consensual downbeat view on the greenback and with it faith that dollar-weakness beneficiaries will flourish this year. That said it really looks premature for the dollar bears to throw in the towel. "We remain dollar bears," said Credit Suisse, noting how the dollar's recovery this month was a just "bear market rally. "We are comfortable remaining overweight USD-weakness beneficiaries, including GEM equities both directly and through DM-listed EM exposure, and European mining. We remain cautious on a number of the USD-exposed areas, such as European pharma," strategists at the Swiss bank said. In more detail on European stocks, they said the most sensitive beneficiaries are those with more dollar costs than revenues such as ABF, M&S and Electrolux. Among the relative losers they mention Infineon, Richemont, Atlas Copco, and Nokia. In this chart you can see how these stocks have performed over the last year -- and not necessarily the dollar-weakness beneficiaries have done better. (Danilo Masoni) ***** THE ELEPHANT IN THE ROOM (1101 GMT) How much is enough? With the Bank of Japan’s equity holdings ballooning to 45 trillion yen ($435 billion), according to estimates by RBC Capital Markets, or more than 6% percent of the Japan’s total equity market capitalisation, investors are wondering when will the central bank start to unwind its massive equity holdings. True, the BOJ's equity holdings are nowhere near its ETF holdings which account for roughly 80% of the total market but its growing presence is numbing markets. Daily realised volatility on the Japanese stock market .N225 is hovering above a 2020 low. The Bank of Japan’s program to buy ETFs and keep a tight grip on bond yields is likely to come under review at a March policy review, according to sources.*:nL4N2JT0XW With the equity markets rallying under their own steam, there is no reason for the BOJ to continue building up their dominant position in the equity markets. But the trick will be to introduce flexibility to scale back purchases without introducing the risk of tighter policy, according to Adam Cole, chief currency strategist at the bank. (Saikat Chatterjee) ***** AUTOS HOLD KEY TO DRIVE EUROPE OUT OF PROFIT RECESSION (1007 GMT) The Q4 reporting season will see Europe suffer another big profit drop but investors are looking beyond that as the recovery from the COVID-19 downturn is gradually taking shape in what will drive earnings into a massive turnaround. Oct-Dec quarter is expected to be the last negative quarter for Europe Inc (-26%). In Q1 there will be a 44% profit jump followed by an even larger surge of 81% in the following quarter, according to the latest Refinitiv I/B/E/S estimates this week. But what exactly is going to drive the region out its profit recession? Some more granular forecasts may hold the answer. The cyclical consumer sector, which includes auto stocks, is expected to post an 3118% profit gain in Q1, by far the largest increase in the STOXX euro zone earnings, followed by industrials (643%) and financials (2017%), according to I/B/E/S. Drilling the down to single stocks here the three main findings for that quarter: * Daimler (1471%), Fiat Chrysler (177%) and Volkswagen (602%) are the largest contributors in cyclical consumers * Within industrials, Airbus (356%) is the biggest * In financials, BBVA (131%) is the largest In the chart below you can see how auto stocks .SXAP , which have just hit a 14-month high, have recently seen their biggest earnings revisions in a decade. (Danilo Masoni) ***** ECB: ANY QUESTION ABOUT ITALIAN SPREAD? (0951 GMT) There is broad consensus that today’s ECB policy meeting will be uneventful, with investors focusing on central bank communication. But, after the political turmoil in Italy, the new hot topic seems to be whether the central bank stepped in or would do so in case of a political crisis in Italy coupled with a rise in its government bond yields. Little happened recently as prime minister Giuseppe Conte won a confidence vote allowing him to remain in office after a junior partner quit his coalition last week.*:nL8N2JU648 But analysts expect the spread between German and Italian government bond yields to widen up to 200 basis points in case of snap elections, with just some of them assuming the ECB would have skewed its purchases in favour of BTPs. There may be attempts in the Q&A today to ascertain “whether the PEPP backstop for European government bond fragmentation applies if the cause is idiosyncratic political risk (e.g., should there be a surprise early election in Italy),” a Citi research note says. “Tolerating a significant move higher in yields now would challenge the success of any promise to overshoot inflation,” BofA analysts say in a research note, adding that the weekly purchases, in the context of the Italian political turmoil, “will be an important input to that assessment.”. In the chart below you can see the widening and tightening of the spread between German and Italian government bond yields during and after Italian political drama. (Stefano Rebaudo) ***** OPENING SNAPSHOT: RISK-ON MODE (0831 GMT) Some analysts are wondering how long this sort of honeymoon between U.S. President Joe Biden and Wall Street is going to last as a quick approval of a $1.9 trillion aid package cannot be taken for granted. But for the time being stimulus hopes continue to boost risk-sentiment and stock prices across the globe. In Europe, the STOXX 600 index .STOXX is up 0.5% led by tech stocks .SX8P , up around 1%. Among single stocks, Sage Group SGE.L shares are up 5.4% after its trading update, while Cellnex CLMX.MC rises 3.5% after a deal with Deutsche Telekom STEGn.DE to combine Dutch cell phone tower businesses. (Stefano Rebaudo) ***** THE DAY OF THE CENTRAL BANKS (0753 GMT) Vaccinations are just getting off the ground so there is not a whole lot central banks can do at this point. The Bank of Japan confined itself to marginally upping 2021 GDP growth forecasts but held off extending the target band for 10-year yields as had been speculated. Similarly, it's too soon for the European Central Bank to act after it extended asset purchases last month but after five straight months of negative inflation readings, markets will seek the ECB's views on euro strength, how much of its emergency stimulus "envelope" it might spend and whether yield -- or rather spread - control is likely. Nor are policymakers expected to do much in Norway, South Africa and Turkey, though there is a slim chance of a hike in Turkey where the new governor has hiked rates 675 basis points since early November. Back on markets, so much for Donald Trump's warnings of a stock market crash should Joe Biden become president -- Wall Street scaled new record highs after Biden's inauguration and futures imply further gains ahead in New York as well as across Europe. Watch out for weekly U.S. jobless figures which are expected to stay close to the one million-mark, reinforcing the need to quickly get Biden's planned stimulus package off the mark. In keeping with the risk-on mode, the dollar is slipping, benefiting commodity currencies such as the Aussie and Canadian dollars. Sterling is above $1.37, near 2-1/2-year highs. Key developments that should provide more direction to markets on Thursday: -European Central Bank -Norges Bank -UK CBI business sentiment/new orders -South African Reserve Bank -Central Bank of Turkey -U.S. initial jobless claims -US Treasury to sell $15 billion in 10-year TIPS -U.S. earnings: Coca Cola, American airlines, Southwest Airlines, American Express, Carnival Corp, IBM, Intel -Europe earnings: Spain's Bankinter said 2020 net profits fell 42.4% vs previous year -Julius Baer shares marked down 1% after industry watchdog FINMA launched proceedings against a senior manager and reprimanded two others over failure to prevent money laundering. (Sujata Rao) ***** U.S. STIMULUS IN FOCUS (0633 GMT) European stock futures are in the black as stimulus hopes are supporting risk-appetite globally after Joe Biden yesterday was sworn in as the 46th U.S. president. Some analysts worry that his plan’s $1.9 trillion price tag would be challenged in Congress, but Republicans signalled a willingness to work with the President to fight the adverse economic impact of the pandemic. Also a relief over an orderly transition of power in the U.S. props up risk-sentiment, while concerns about rising taxes and more regulations remain in the background. (Stefano Rebaudo) ***** <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ snapshot snpashot1 spread Autos BOJ graphic EU stocks sensitive to dollar ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
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