* Nonfarm payrolls increase 266,000 in November
* European shares edge higher
* Germany's industrial output fell sharply in October
* Wall Street futures in the black Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Joice Alves. Reach her on Messenger to share your thoughts on market moves: email@example.com
EUROPEAN BOURSES JUMP ON U.S. JOB DATA (1402 GMT)
It is a very calm day but better-than-expected U.S. job data gave traders some comfort, helping European bourses accelerate gains.
"Forget Star Wars, this year’s Christmas blockbuster is today’s nonfarm payrolls report", Neil Wilson, chief market analyst for Markets.com commented.
The pan-European index is now up 0.9% and the UK blue chip index is rising 1.1% after NFPs increased by 266,000 last month, beating the Reuters consensus of 180,000.
Here is a snapshot of the immediate reaction of the STOXX 600 and the FTSE.
THE POST DEC. 12 UK HOUSE-BUILDING BET (1313 GMT)
So, let's imagine the Dec. 12 election does give the business-friendly outright Conservative majority some investors are hoping for.
Imagine you're part of that crowd, what would you buy?
Marco Pabst, chief investment officer at Union Bancaire Privée believes UK homebuilders and could be a good bet.
Thanks to their high dividend payments and the fact that the number of housing transactions in the UK still hasn't recovered to pre-crisis levels, stocks like Bellway, Persimmon , Taylor Wimpey, Redrow and Countryside Properties look attractive, he said.
The highest dividend yield out of the companies in the FTSE 350 Household Goods Index is Persimmon's 9.34%. Let's bear in mind however that super juicy dividends are also known to lure investors into value traps.
"Homebuilders are cheap from a valuation perspective but it's also pretty impressive to see how they've restructured their balance sheets since the financial crisis," Pabst said.
Pabst also cited the fact that new homes being built in the UK each year consistently falls around 100,000 short of the government's 300,000 target – so you'd expect it to be top of the new government's agenda in 2020. Along with Brexit, of course.
UK homebuilders were among the top gainers on the FTSE 100 <.FTSE 100> during October's rally when markets took the risk of a no-deal Brexit off the table.
Pabst said he won't invest in the stocks he mentioned until after the election, once the risk of a Labour government putting them in "total reverse" has gone away.
Just this morning British homebuilder Berkeley Group Plc reported a slump in first-half pretax profit, as homes are being sold at lower prices.
The real-estate market has been jammed by Brexit. Last month the number of properties put up for sale in Britain saw its biggest drop in ten years and a Reuters poll found that house prices aren't even expected to keep up with inflation.
On the brighter side house prices rose in November at the fastest annual rate in seven months and 2.1% year-on-year.
But let's not forget that more broadly, British real estate is a troubled sector and M&G Investments suspending its flagship UK property fund on Wednesday was a big reminder of that.
GERMANY: NO LIPSTICK ON THE PIG (1211 GMT)
Germany's industrial output fell unexpectedly in October casting fresh doubts over the country's economic health as the two heavy-weights of the industrial sector, the auto and machinery sector, are pushing down economic activity.
UniCredit says the steep decline is bad but not catastrophic enough to lead the country into recession.
"This is not the time to put lipstick on the pig. This morning’s steep decline in industrial activity is an outright disappointment," writes Andreas Rees, UniCredit's Chief German economist in a note. However, "we think that a decline in German GDP, or even a recession, can be avoided," he adds.
How Germany will avoid a recession, according to the Italian bank:
1) Domestic demand is expected to be robust enough to keep the economy afloat.
2) There are some underlying signs of stabilisation.
3) There are also some rays of hope. The new-orders-to-inventories ratio included in the manufacturing PMI survey bounced back in October/November to slightly below one from its lowest level since the global financial crisis
4) Renewed rise in car sales in China and car registrations in the EU.
Meantime, the German Dax index is trading in positive territory, up 0.3%.
SELLING BONDS AND RUSHING BACK INTO EUROPEAN EQUITIES (1131 GMT)
It's over! After 85-consecutive weeks of outflows, European equity funds have finally returned to inflows, Morgan Stanley analysts write this morning in a strategy note.
As one could expect, the move into risk assets comes with flows for European bonds turning negative.
It doesn't change the picture for 2019 with so far $100bn of outflows from equities and $50bn of inflows into European bonds. It could, however, be a tipping point.
"We think we will see a resumption of European equity inflows as global equity investors increase exposure to the region and European asset allocators move some funds from bonds to stocks", they write.
It's not only an European things though. According to Bank of America Merrill Lynch and EPFR Global data, global equity funds received $7.2bn in the week to Wednesday and U.S. equities sucked in $2.6bn, their biggest weekly inflow in a month.
Looking into the latest batch of 2020 outlooks, analysts still seem torn over whether U.S. shares will continue to outperform their European peers in 2020.
TGIF: EUROPEAN SHARES EDGE HIGHER (0900 GMT)
European bourses are trading in positive territory this morning after Trump said trade talks with China were "moving right along".
The pan-European STOXX 600 index rose 0.2%, with banks, technology firms and retail companies leading the gains.
The bluechip London index rebounced with trade-sensitive financials and miners leading the recovery.
Germany's Dax was flat at the open after the country's industrial output fell unexpectedly in October, but the index quickly bounced back.
In terms of single stocks, France-based biopharmaceutical group Ipsen is on track for its worst day ever, down 24%, after it announced partial clinical hold for palovarotene ind120181 and ind135403 studies.
Here is a snapshot of European bourses this morning:
MIXED SIGNALS (0755 GMT)
Stock futures of most European bourses point to a slightly higher start as investors are feeling more confident the U.S. and China are closer to seal a trade deal after Donald Trump said yesterday talks with China were "moving right along".
But investors will also have fresh weak data to digest. German industrial output fell unexpectedly in October on a sharp drop in production of capital goods, pointing to persistent weakness in the backbone of the economy that may stabilise in the coming months, the Economy Ministry said this morning. On the corporate front, insurers will be under the spotlight after Phoenix announced its biggest-ever deal. It agreed to buy Swiss Re's ReAssure unit for $4.1 bln.
Homebuilders are also on our radar: Berkeley Group is seen down at the open after it reported a slump in first-half pretax profit. The company sold fewer homes at lower prices in the Brexit hit real-estate market.
On the small cap front, one trader sees Haynes up 10% after the company reported it expects HY adjusted profit before tax to finish ahead of prior year by c. 37%.
Associated British Foods is seen higher by one trader at the open as the company kept its FY forecast for earnings growth and said it plan further expansion of its Primark fashion chain. Other corporate stories:
WPP to return $1.2 bln to investors via repurchase after Kantar deal
Italy's Sanlorenzo prices IPO at 16 euros/share
AB Foods forecasts earnings growth in 2019-20 year
Telecom Italia, Open Fiber trade barbs over single network project
UK's CMA raises local competition concerns over Stonegate's takeover of Ei
EUROPEAN STOCKS SEEN HIGHER (0635 GMT)
European bourses are seen opening slightly higher this morning as investors are feeling more confident the U.S. and China are closer to seal a trade deal after the U.S. President Donald Trump said yesterday talks with China were "moving right along".
Trump's upbeat tone in comments was enough to spark buying across Asia overnight, despite a lack of agreement between the two countries over whether existing tariffs should be dropped as part of the "phase one" deal to end the 17-month trade war.
Financial spreadbetters at IG expect London's FTSE to open 18 points higher at 7,156, Frankfurt's DAX to open 56 points higher at 13,111 and Paris' CAC to open 23 points higher at 5,825.
(Reporting by Danilo Masoni, Joice Alves, Julien Ponthus and Thyagaraju Adinarayan)