Live Markets: Opening snapshot: risk-on ahead of Fed speech

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23/08/2019 08:29

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    OPENING SNAPSHOT: RISK-ON AHEAD OF FED SPEECH (0728 GMT)
    Investors are piling into riskier assets this morning buoyed by optimism that Fed chair
Powell will strike a dovish tone in his Jackson Hole speech later this afternoon even as some
market participants caution the market may be getting ahead of itself.
    The pan European STOXX 600  .STOXX  and euro-zone  .STOXXE  benchmark are up 0.5% in early
deals, with only the oil & gas index  .SXEP  in negative territory.
    Among individual moves, Rockwool International  ROCKb.CO  is down 16% at the bottom of the
pack and its lowest in two years after Q2 results, while SimCorp  SIM.CO  is the top gainer
after it upgraded its earnings outlook, while ThyssenKrupp  TKAG.DE  is up more than 4% after a
report it's looking to buy metals distributor Kloeckner & Co  KCOGn.DE . 
    Entertainment One  ETO.L  is on a tear after Hasbro offered to pay a 26% premium in cash for
the Peppa Pig-owner. Its shares are trading above the offer price, up 29%.
        
    
    (Josephine Mason)
    *****
     
    ON OUR RADAR: CARTOON PIGS, STEEL DEALS AND POWELL (0557 GMT)
    European stock futures are flying high in early deals amid hopes that Fed chairman will
deliver a resoundingly dovish speech later today that will signal the start of a sustained
easing cycle.
    Whether that's realistic remains to be seen given the U.S. central bank has insisted the
July cut was a mid-cycle adjustment rather than the start of further easing.
    But for now, investors are embracing the optimism and the Eurostoxx futures  STXEc1  are up
0.8%, while London stock futures are up 0.7% recovering from yesterday's heavy sell-off after
the pound rally.
    "To say that the stakes are high for the meeting is an understatement," says Jasper Lawler,
head of research at London Capital.
    There may be some tidying up of portfolios ahead of the long UK bank holiday weekend too.
    Aside from the wild intraday swings with investors reacting knee-jerk to headlines at home
on everything from fiscal stimulus, Brexit and Italy's political tumult, the pan European market
 .STOXX  has had a pretty decent week and is on track for its best week in two months.
    Still both the European benchmark and its euro-zone counterpart  .STOXXE  are heading
towards a 3% drop for August, only its second monthly drop this year roiled by U.S. President
Trump's shock decision to impose fresh tariffs on Chinese imports. 
    It feels like a long time ago now and of course he's backtracked, but the latest salvo in
the protracted dispute has kept investors on the summer sidelines.
    In corporate news, news that the owner of the popular (with kids and adults from the UK to
China) Peppa Pig cartoon will be sold to Hasbro for $4 billion in cash has caught most
attention. 
    That's a tasty 26% premium to yesterday's closing price and Entertainment One  ETO.L  shares
are expected to rally. For Hasbro, it's a major step towards gaining access to the lucrative
infant and preschool market.  urn:newsml:reuters.com:*:nL2N25I1I6    
    Shares in Kloeckner & Co  KCOGn.DE  are soaring 18.8% in premarket trading after a newspaper
said Thyssenkrupp  TKAG.DE  was in talks to buy the metals distributor to strengthen its
materials trading business, citing sources familiar with the matter.
    Thyssenkrupp, which had its best day in months yesterday, is up 2.2%, making the stock the
biggest gainer in the country's DAX top-30 index. The report is giving other steel stocks a lift
too amid hopes of more dealmaking - Salzgitter  SZGG.DE  shares are up 3% in premarket trade.
    A largely negative note from influential bank BAML on the European autos sector including
Daimler  DAIGn.DE , Volkswagen  VOWG_p.DE , Continental  CONG.DE  and Pirelli  PIRC.MI  is
likely to weigh on the battered industry.
    
    Early headlines:
    Eddie Stobart CEO steps down, asks for shares suspension  urn:newsml:reuters.com:*:nL4N25J1CA
    Commerzbank discussing more job cuts - newspaper  urn:newsml:reuters.com:*:nL5N25J0YH
    French mayors ban glyphosate weedkiller, defying government  urn:newsml:reuters.com:*:nL5N25I4J0
    Thyssenkrupp in talks to buy steel trader Kloeckner - Handelsblatt  urn:newsml:reuters.com:*:nL5N25I5MH
    U.S. SEC fines Deutsche Bank $16 mln to settle foreign corruption charges  urn:newsml:reuters.com:*:nL2N25I1NV
    Adyen founders selling 15 percent of their holdings  urn:newsml:reuters.com:*:nA5N21Q00W
    Hasbro takes home Peppa Pig, PJ Masks in $4 bln eOne deal  urn:newsml:reuters.com:*:nL2N25I1I6
    INTERVIEW-Restructuring at Osram will include job cuts - AMS  urn:newsml:reuters.com:*:nL5N25I4VE
    GRAPHIC-AQR, Marshall Wace lead hedge funds to benefit from Europe bank slide  urn:newsml:reuters.com:*:nL5N25H2B2
    BT Group in talks to sell Irish corporate business -Sky News  urn:newsml:reuters.com:*:nL5N25I6E4
    
    (Josephine Mason)
    *****
    
    HOPING FOR CLARITY, EUROPE BRACED FOR POWELL SPEECH (0523 GMT) 
    Fed chairman Jerome Powell's speech later today at 1400 GMT will capture most of the
market's attention today, and keep stocks volatile ahead of it.
    Some investors say his address at the Jackson Hole symposium may well disappoint because the
market is expecting, or rather hoping, that he'll give clear guidance that rates will be going
lower.
    But the FOMC minutes on Wednesday and recent comments from central bankers suggest the Fed
may not be in a rush to declare the start of a sustained easing cycle.  urn:newsml:reuters.com:*:nL2N25I113
    "It would be remarkable if he veered too far towards telegraphing additional mid-cycle
adjustments at the upcoming meetings in September or October, let a lone a full-blown easing
cycle," says John Velis, forex and macro strategist for the Americas at BNY Mellon
    IG financial spreadbetters are calling London's FTSE to open 28 points higher at 7,156,
Frankfurt's DAX to open 57 points higher at 11,805, and Paris' CAC to open 27 points higher at
5,415.
    
    (Josephine Mason)
    *****   


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 (Reporting by Danilo Masoni, Josephine Mason and Thyagaraju Adinarayan)