Live Markets: Top picks for the circular economy transition
23/01/2023 12:55
*
STOXX 600 up 0.3%
*
Tech leads gainers
*
Most Asian markets shut
*
U.S. stock futures edge higher
Welcome to the home for real-time coverage of markets brought to
you by Reuters reporters. You can share your thoughts with us at
TOP PICKS FOR THE CIRCULAR ECONOMY TRANSITION (1245 GMT)
The circular economy, which strives for an increased
recycling rate, is gaining recognition in Europe, but this means
corporates will have to adapt to growing number of new rules.
The task will not be easy especially for the packaging,
plastic and chemical sectors but Berenberg believes a number of
companies look well equipped to help drive the transition to
more sustainable business practices.
In a deep-dive note on the circular economy, analysts at the
German bank single out the potential winners of these changes -
be it upcoming legislation on single-use plastic bans, new
packaging rules and pressure to ban certain chemicals.
Its buy-rated circular economy top picks include Germany's
Befesa BFSA.DE , which recycles steel dust and aluminium
residues, and French waste management group Veolia VIE.PA .
Also featuring are biotech firm AFYREN ALAFY.PA , software
maker Autodesk ADSK.O , R&D firm Avantium AVTX.AS , equipment
maker Bucher BUCN.S , materials company Coats COA.L , consumer
care company Croda CRDA.L , packager DS Smith SMDS.L ,
services provider Elis ELIS.PA , metals processing company
Jubilee JLP.L Metals, and equipment maker Marel MARL.IC .
(Boleslaw Lasocki)
****
ECB NEEDS MORE THAN SOFTER HEADLINE INFLATION TO PIVOT -
UBS(1147 GMT)
The fall in euro zone inflation in December is not enough to
warrant the ECB changing tack, UBS economists say.
Brushing off recent press reports of a potential 25-bps hike
from the ECB at its March meeting, the economists expect two
back-to-back 50-bp increases from the ECB in February and March.
Their view is supported by comments from ECB governing
council member Klaas Knot, who on Sunday said he expects the
central bank's main interest rate to rise 50 bps in both
February and March and to keep climbing after that.
An improvement in the broader inflation environment, not
just headline numbers, is needed for a central bank pivot, UBS
said. That would include "measures of core inflation, underlying
inflation, inflation expectations, and wage dynamics".
Lower energy prices were behind December's fall in headline
inflation to 9.2%, from October's peak at 10.6%. But core
inflation kept rising, hitting 5.2%.
Other metrics, such as inflation expectations surveys, also
provided little relief.
"...the ECB’s surveys of professional forecasters (SPF) and
of monetary analysts (SMA), as well as market-based inflation
expectations (5y5y forwards), have on balance moved marginally
higher and remain above the ECB target," the note reads.
The UBS economists also flag the potential for
"pro-inflationary second-round effects" as euro zone nominal
wage growth continues to pick up.
They expect a further decline of 0.2% in headline inflation
in January, taking it to 9%, and a decline in core inflation to
5% from 5.2%.
January inflation data is due on February 1.
(Lucy Raitano)
*****
TECH LEADS, FRESH HIGHS FOR FINANCIALS (0900 GMT)
Hawkish ECB speak at the weekend and the late tech-led rally
on Wall Street on Friday are giving shape to today's open across
European equity markets, pushing financials to fresh highs and
making tech the best sectoral performer.
The STOXX Europe Tech .SX8P index recovered part of
Thursday's slump to gain more than 1%, banks and insurance
stocks - which benefit from rising interest rates - both rose to
fresh 11-month highs before retracing.
Aerospace and defence stocks .SXPARO hit a fresh near
3-year peak, just shy of the pre-COVID levels of 2020 and were
last little changed. The broader STOXX 600 .STOXX benchmark
index was up by 0.2%, still below the April 2022 peak hit last
week.
Here's your opening snapshot:
(Danilo Masoni)
*****
EUROPEAN STOCK FUTURES EDGE HIGHER (0738 GMT)
European shares look set to start the final full week of
January on a good footing, with EuroSTOXX50 STXEc1 index
futures rising around 0.5%, even as the euro EUR= touches its
highest since April 2022 against the dollar.
Hawkish weekend comments from ECB governing council member
Klaas Knot are keeping the currency supported and later in the
day the focus will shift to ECB President Christine Lagarde.
Most Asian markets were closed for Lunar New Year, while
U.S. futures pointed to a muted start on Wall Street following
Friday's rally that pushed the tech-heavy Nasdaq .IXIC up
2.7%, its biggest one-day gain since November, up 2.7%.
In European corporate news, steep falls are expected for
Symrise SY1G.DE after the flavour and fragrance maker warned
its 2022 results will miss expectations due to an impairment.
In the UK, Dignity DTY.L is set to rally on news of an
takeover offer that values the funeral services provider at a
9.9% premium to Friday's closing price.
(Danilo Masoni)
*****
EURO RISING (0649 GMT)
It's been a quiet start to the week in Asia with much of the
region on holiday. U.S. stocks futures are near flat, but
EUROSTOXX futures added 0.5% to extend their recent bullish run.
Presumably much of that is due to the 60% drop in European
gas prices since December and relief that the worst fears of an
energy crunch have not come about, even if it has turned a bit
colder in recent days.
Analysts assume the same sea change will deliver an
improvement in the EU flash PMIs for January this week, likely
outperforming the U.S. surveys.
This has combined with some hawkish words from ECB Governing
Council member Knot to lift the euro to a fresh nine-month high
at $1.0903 and challenge the April spike top at $1.0936.
Knot is considered a card-carrying member of the ECB hawk
club, which was clearly irked by recent reports that the central
bank might step down to quarter-point hikes in March.
The latest Reuters poll of analysts tips hikes of 50 basis
points in both February and March and a peak of 3.25%, while the
Fed is now thought certain to go by 25 basis points next week.
urn:newsml:reuters.com:*:nL8N3452C7
Minutes on Monday of the Bank of Japan's December meeting,
where they shocked markets by widening the yield curve band,
were striking in how dovish board members still were. The move
really was aimed at dysfunction in the bond market and was not a
flag of future tightening or dropping YCC altogether.
Members were keen that the BOJ explain to markets that the
change was not a step toward an exit from policy easing,
something it clearly failed at in the official statement.
Indeed, most of the discussion was about the importance of
maintaining stimulus, a stance Governor Kuroda repeated more
forcibly after last week's meeting.
Going by all this, if YCC is to change it will likely be
under the new governor in April, and it is not clear the whole
board would agree with it.
Key developments that could influence markets on Monday:
- ECB's Lagarde and Panetta are appearing
- No major economic data due on Monday. Around a quarter of
the S&P 500 report this week starting with Microsoft on Tuesday.
(Wayne Cole)
*****
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
EU open https://tmsnrt.rs/3HlWJH8
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>