Live Markets: Real estate flashing red

Fastighets AB Balder

09/05/2023 09:21

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      STOXX 600 down 0.3%
    

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      SBB scraps rights issue
    

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      Euro zone volatility subdued
    

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      U.S. stock futures dip
    

  
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    REAL ESTATE FLASHING RED (0800 GMT)
    It's a day of heavy losses for real estate in Europe after
top Swedish landlord SBB  SBBb.ST  scrapped plans for a rights
issue as its shares  plummeted amid growing liquidity concerns
that sparked S&P to cut its credit rating to junk.
    The STOXX Europe 600 Real Estate index  .SX86P  was the
biggest sectoral faller in early deals, down more than 2% at one
point - welcome news for the short sellers. 
    SBB slid as much as 9.5% in Stockholm, adding to a 20% slide
the day before, dragging other Swedish property stocks Fabege
 FABG.ST , Castellum  CAST.ST  and Balder  BALDb.ST  lower.
    Real estate jitters however didn't show signs of spilling
over to the broader market. 
        The region-wide STOXX Europe 600 index  .STOXX  fell
0.3% and a gauge of euro zone equity volatility  .V2TX 
languished just above 18 points. Banking stocks  .SX7P  were
flat.
  
    Yet, ING said SBB's troubles might cause fresh issues for
the Swedish crown, already under significant pressure,
especially against the euro.  SEK=D3   EURSEK=D3  
    "This is sending shockwaves to the real estate sector in
Sweden (and also spreading across Europe) and once again raising
questions about the path of monetary policy in Sweden in light
of the large slumps in house prices," wrote ING strategist
Francesco Pesole.
    In the snapshot the top real estate fallers by mid morning. 
       
    
    (Danilo Masoni)
    *****


        
  
        
  
         
  
        
  
        
  
        
  
        (Danilo Masoni)
  
        *****    
  
        
  
    EUROPEAN FUTURES SEEKING DIRECTION (0645 GMT)
    European shares were set to open without clear direction on
Tuesday with futures moving around parity following an uncertain
session in Asia and a flat Wall Street close, as investors grow
cautions ahead of Wednesday's U.S. inflation report.
    EuroSTOXX50 and DAX contracts were last little changed,
while FTSE 100 futures added 0.1%, as London reopens following a
long weekend. U.S. futures were down slightly.
    In European corporate news, some earnings releases were in
focus. Dialysis specialist Fresenius Medical Care reported a
drop in its Q1 adjusted operating income but said labour
shortages were slowly easing.
    Chemicals group Evonik reported a smaller than expected drop
in Q1 core profit, while Daimler Truck reported a higher return
of sales, towards the top end of its annual outlook for 2023.
    In M&A, sportswear group JD Sports proposed to buy France's
Groupe Courir for an enterprise value of 520 million euros.
    SBB remained on the watchlist after the Swedish landlord
delayed its dividend and scrapped plans for a $259 rights issue
following heavy losses in its share price in the wake of a
credit rating downgrade to junk.
        
    (Danilo Masoni)
    *****
        
  
        
  
    US UNCERTAINTY FEEDS CAUTION IN ASIA (0558 GMT)    
    European investors hoping to find some clues on market
direction from Asia may be disappointed today.
    Overall, the market mood was cautious ahead of the week's
trading highlight, Wednesday's U.S. CPI report, which will put
to the test the market's view that the Fed is done hiking.
    A regional stock benchmark eased back from a more than
two-week high, the dollar was firm and Treasury yields remained
elevated, despite coming off a bit in Tokyo. Crude oil and gold
were basically treading water.
    However, the region's biggest stock markets were outliers:
Japan's Nikkei rebounded sharply from losses in the previous
session as strong earnings lifted the steel sector, and mainland
Chinese blue chips jumped, showing little interest in data that
revealed an unexpected decline in imports last month and slowing
exports.
    Every U.S. economic indicator has taken on added importance
after Fed Chair Jerome Powell signaled last week that the policy
path will depend on incoming data. 
    And there are several other reasons that investor attention
is squarely on the U.S., with the debt ceiling tussle deadlocked
and banking sector troubles simmering.
    Lenders got a bit of respite overnight, after Treasury
Secretary Janet Yellen said regulators stand ready to mobilize
the same tools used in previous bank rescues.
    The Fed's quarterly Senior Loan Officer Opinion Survey
('SLOOS') also buoyed the mood, showing tighter lending
conditions but no impending credit crunch. Still, the proviso is
that the results missed the latest turmoil around First Republic
and PacWest.
    Yellen also had a warning that failure to lift the debt
limit would cause a huge hit to the U.S. economy and weaken the
dollar as the world's reserve currency, reiterating that the
government could be out of cash by June 1.    
    
    Key developments that could influence markets on Tuesday: 
        - ECB board members Philip Lane, Isabel Schnabel to
speak at separate events
    - U.S. National Federation of Independent Business (NFIB)
April survey of small businesses
    - President Joe Biden and Republican lawmakers meet to
discuss the debt ceiling standoff
    
    (Kevin Buckland)
    *****
    
    

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