LIVE MARKETS-Brexit: searching for clarity as "meaningful vote" looms
* European shares climb
* Autos, miners and tech in the lead
* Trump tweets: "talks with China going very well!"
* Wall Street opens higher for fourth straight day
Jan 9 - Welcome to the home for real-time coverage of European equity markets brought to you
by Reuters stocks reporters and anchored today by Danilo Masoni. Reach him on Messenger to share
your thoughts on market moves: danilo.masoni.thomsonreuters.com@reuters.net
BREXIT: SEARCHING FOR CLARITY AS "MEANINGFUL VOTE" LOOMS (1503 GMT)
The market reaction to Brexit headlines today is largely conspicuous by its absence. Why the
eerie calm? One trader says the headlines "are pretty pointless until the vote on the 15th."
Indeed, next Tuesday's vote is the main event, and anything until then seems to pale in
comparison. Even (Taiwan OTC: 6436.TWO - news) then, uncertainty will likely continue.
"If the Meaningful vote is passed, uncertainty would disappear in the short term, but the
details of the future relationship after the transition period are still unclear," Nomura
strategists write in their Brexit outlook.
In the latest blow to the government, lawmakers voted 308 to 297 for a procedural change
that reduces the time the government has to come up with an alternative plan if May's Brexit
deal is defeated next week.
Nomura published its second iteration of what they call their "Meaningful survey" of
investors, and you can see below an infographic with some of the key findings, including that
more investors expect a second vote on the same deal, while more also see a second referendum as
likely. According to Nomura's survey, investors expect GBP/USD to jump 4.7 percent if the vote
is passed on Tuesday, while it will fall 2.3 percent if it fails.
JP Morgan Asset Management this morning also said it sees sterling jumping 4 percent if
parliament approves the plan.
(Helen Reid)
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VEGAN SAUSAGE ROLL GATE: NO SUCH THING AS BAD PUBLICITY! (1316 GMT)
Shares (Berlin: DI6.BE - news) in Gregg's, the British baker, are shining through the session, having hit a record
high of 1480 pence and still rising a handsome 5.8 percent.
For those outside the UK who don't know the brand, Gregg's is a no-frills, resolutely
un-hipster food-to-go chain focusing on hearty and filling, non-dietary snacks.
Anyway the new hype around the shares comes as it nudged up its 2018 profit forecast to at
least 88 million pounds just after launching a controversial vegan version of its popular
sausage roll. (See []
"All the media controversy swirling since their launch last Thursday appears to have given
Greggs (Stuttgart: 41G1.SG - news) a welcome helping of free publicity, for a product that could be a key driver of sales
growth in the current year," writes Fiona Cincotta from City Index.
There was indeed some outrage in England about offering a vegetarian option to the iconic
sausage roll but the view is that there's nothing like bad publicity.
"We think it highly unlikely that all those vegan-loathing carnivores out there, although
outraged by the launch, will be outraged enough to forgo their Greggs steak bakes in protest",
Cincotta adds.
Jordan Hiscott, Chief Trader at Ayondo Markets takes the view that the baker's "PR and
marketing has shown itself to be extremely nimble and smart".
"Piers Morgan slating the product on national day time TV caused it to go viral, increasing
demand in store," he argues.
Here are three snapshots to illustrate the controversy: the first from the British
journalist Piers Morgan's Twitter (Frankfurt: A1W6XZ - news) account, the second is from the Sun reporting how a Brexit
demonstration got mistaken for an anti-vegan roll protest and the third one is the original
sausage roll.
(Julien Ponthus and Thomas Wilson)
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CHOOSE YOUR WORRY: THE FED OR THE TRADE WAR, NOT BOTH! (1148 GMT)
JP Morgan AM held a press conference this morning on the key messages they're conveying to
their clients as the year begins and among them is to choose what to worry about.
While it's not clear whether we've entered a bear market or just running late in the cycle,
many investors fear that the Fed jumping the gun on rates or the U.S./Sino (Dusseldorf: 1205802.DU - news) trade war beef
spiralling into a full-blown trade war could be the straw that definitely breaks the bull's
back.
But according to Mike Bell, global market strategist at JPM AM, "it's either the Fed or the
trade war, don't worry about the two happening at the same time".
The idea is that Fed chief Powell is indeed paying attention to markets and newsflows and
that it's most likely he would not tighten monetary policy if Trump's tug of war with China
starts to hurt the U.S. economy badly.
On the other hand, if there is such a thing as a presidential "art of the deal" and an
agreement is found with Xi Jinping, then you can go back to worrying about a monetary accident
and how fast-rising rates could trigger an avoidable recession.
Looking at how markets are getting their hopes high on a trade deal this morning, it seems
investors are keener, like Trump, to worry about the Fed.
(Julien Ponthus)
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OPENING SNAPSHOT: TRADE RALLY CONTINUES (0843 GMT)
Jubilation over the trade talks continues, with European bourses all firmly in positive
territory and the STOXX 600 rallying to Dec (Shanghai: 600875.SS - news) . 14 highs as the market awaits news from the trade
talks between China and the United States, which concluded in Beijing earlier today.
The fact that they entered a third day shows how serious the Chinese government is about the
situation, China's foreign ministry said earlier. The results will be announced
later.
Other than calling a truce, what could be announced that would erase all worries about the
protracted dispute and help markets continue to ride this wave of optimism is not clear.
But for now, investors are even shrugging off more bad news from Apple (NasdaqGS: AAPL - news) after a report that
the iPhone maker has cut output plans for some phones in the first quarter following its shock
warning last week. Tech sector is up and most chip stocks are showing resilience to the news.
AMS (IOB: 0QWC.IL - news) , the maker of 3D recognition technology and Apple supplier, isn't faring so well though,
notching up a 4 percent drop.
UK Retailers and housebuilders - two of the most battered sectors over the past year amid
concerns about the slowing economy and fallout from Bexit - are having a revival.
Taylor Wimpey (LSE: TW.L - news) is leading the housebuilders to the top of the FTSE 100 after its trading
statement while renewed optimism over Christmas trading is spurring a revival in grocers even as
Sainsbury (Amsterdam: SJ6.AS - news) falls after its disappointing holiday update.
Here's a snapshot of the main indices:
(Josephine Mason)
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WHAT'S ON OUR RADAR: TRADE, UK RETAILERS AND APPLE SUPPLIERS (0750 GMT)
Growing optimism over a trade deal is set to lift European shares further today with futures
on main regional benchmarks up 0.5-0.9 percent after China's foreign ministry said talks that
stretched into an unscheduled third day with the U.S. have concluded and results will be
released soon.
On the corporate front, earnings are starting to trickle in with TGS seen down 3-5
percent after the Oslo-listed seismic surveyor posted a smaller-than-expected increase in
fourth-quarter revenues and cautioned on exploration spending this year.
Eyes also on UK retailers with the latest update from Sainsbury showing Britain's
No. 2 supermarket reporting a worse-than-expected fall in underlying sales in the key Christmas
quarter, hurt by poor demand for general merchandise. Sainsbury shares are down 2-3 percent in
premarket trade.
Overall, fourth-quarter earnings for Europe are expected to increase 7.1 percent from Q4
2017 on revenues up 4.5 percent, according to Refinitiv data.
Apple suppliers such as AMS, Dialog, STMicro and Infineon
will be back into the spotlight after the Nikkei Asian Review said the U.S. tech
giant has cut planned production for its three new iPhone models by about 10% for the first
quarter.
Any negative reaction could be cushioned as their shares have already been hit hard by
Apple's sales warning last week and the easing trade tensions helped them shrug off a poor
update from Samsung on Tuesday. AMS, however, which is more exposed to Apple's new models, could
see further pressure following a CS downgrade to underperform.
Other stock movers: Ted Baker (Other OTC: TBAKF - news) posts higher retail sales for Christmas season; Mothercare
third-quarter sales drop 18 pct, store closures ahead of plan; Govt help for Italy's Carige
avoided worsening of bank run-League official; Greggs nudges up profit forecast after strong
finish to 2018; UK builder Taylor Wimpey sees solid sales in 2019, eye on political uncertainty
For more headlines check out the previous post.
(Danilo Masoni)
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HEADLINES ROUNDUP: EYES ON FIAT CHRYSLER, AIR FRANCE (Paris: FR0000031122 - news) , TGS (0659 GMT)
Turning to the corporate front, car maker Fiat Chrysler could be in focus following a
Reuters report saying the Italian-American automaker is nearing a settlement to resolve U.S.
allegations it used illegal software in a diesel pollution case. Earnings are also starting to
trickle in with revenue growth at Oslo-listed seismic surveyor TGS missing expectations, while
Air France KLM reported higher passenger traffic figures for December, although the airline
added that anti-government protests in France had hit its revenues.
Here's your headlines roundup:
Fiat Chrysler nearing U.S. diesel emissions settlement -source
TGS preliminary Q4 revenue lags forecast amid oil price uncertainty
Air France KLM December passenger numbers rise, but protests hit revenues
Swiss National Bank (LSE: 0QKG.L - news) expects 15 billion franc loss for 2018
Brussels casts doubt on IAG's no-deal Brexit flight plan -FT
Italy sets up 1.3 bln euro fund to cover Carige rescue costs
Airbus says it achieved 800 commercial aircraft deliveries in 2018
GlaxoSmithKline (Other OTC: GLAXF - news) to look for early-stage assets - CEO
Vinci (LSE: 0NQM.L - news) to finance 1.15 Bln euro expansion of Lisbon airports
Tokyo court rejects request to end Ghosn's detention - Jij
China's approval of DowDuPont soy poses challenge to Bayer (Swiss: BAYN-EUR.SW - news)
Top suspect in Vitol, Glencore Brazil bribery case arrested in U.S. -court
Dutch refuse Ryanair's right to fire pilots and cabin crew
(Danilo Masoni)
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TRADE OPTIMISM SEEN LIFTING EUROPEAN SHARES FURTHER (0635 GMT)
Growing investor optimism over a possible trade deal between Washington and Beijing has
lifted Asian shares overnight and is set to spill over to Europe today with financial
spreadbetters calling for opening gains on major regional benchmarks.
According to IG (Frankfurt: A0EARV - news) , London's FTSE is expected to open 75 points higher at 6,936, its highest
since Dec. 5, while Frankfurt's DAX is seen rising 133 points at 10,937, its highest since Dec.
13, and Paris' CAC to open 47 points higher at 4,820.
Even Trump has made his part in fuelling the widespread optimism.
Over in Asia, shares climbed to a 3-1/2-week high with MSCI (Frankfurt: 3HM.F - news) 's broadest index of Asia-Pacific
shares outside Japan up 1.5 percent to its highest level since Dec. 14.
(Danilo Masoni)
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