you by Reuters stocks reporters and anchored today by Julien Ponthus. Reach him on Messenger to
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LARGE RISK PREMIUM IN BRITISH, ITALIAN, AND AUTO CORPORATE BONDS (1011 GMT)
Like many others, Generali Investments is highlighting that the widening of credit spreads
has accelerated this quarter - with British and Italian corporate spreads driven by political
turmoil while sectors like Autos are under fire from a trade war and slowing demand.
While the worst of the Italy-Europe budget tug-of-war is behind us now the two have agreed a
the stress over the budget this year at around 35 percent.
To temper that, the good news is there's been no contagion to Spanish and Portuguese
In Britain, where uncertainty over Brexit is far from lifted and has in fact deepened in
recent weeks, corporate bonds are pricing in a risk premium of around 17 percent, Generali
estimates - the highest level since the second half of 2016, but well below the 30 percent
levels seen immediately after the Brexit vote.
For the Auto sector, which is in a bear market in Europe, are 48 percent larger than Utility
spreads - compared with a historical average of 13 percent.
"We see scope for the sector to remain under pressure due to trade war concerns and
dwindling demand in China," writes Generali analyst Luca Colussa.
Spreads widening further will definitely be a key area to watch in 2019.
OPENING SNAPSHOT: DELIVERY HERO THE SILVER LINING TO A GLUM MARKET (0834 GMT)
European markets are looking pretty gloomy today with euro zone benchmarks down 0.5 to 0.9
percent while the FTSE 100 holds up slightly better, down just 0.1 percent thanks to its heavy
metal constituents rising on stronger copper prices.
Delivery Hero shares are soaring as much as 25 percent, top STOXX gainers, after
the company agreed to sell its German food delivery operations to Dutch firm Takeaway.com
. The latter's shares are up 29 percent, set for their biggest ever one-day gain.
boosts investors' appetite for the stocks, all of which are relatively new (Just Eat and
profit warning, capping a miserable year.
The STOXX is on track for its worst month since Jan 2016, down 6.3 percent in Dec alone.
Volatility is also strongly on the rise - the Eurostoxx 50 volatility gauge climbed
in early deals to a 10-day high after the more widely-traded VIX hit its highest level
since the Feb volatility spike. The VIX has seen its strongest weekly gain this week since the
early October selloff.
ON THE RADAR FOR THE OPEN: TGIF (0749 GMT)
European markets are actually not looking that bad at the moment with futures hovering
around -0.3 pct, suggesting that bourses on the old continent are reluctant to rush in the
footprints of Wall Street’s routing traders.
Speculation about a U.S. government shutdown and Mattis’ resignation aren’t doing much for
aren’t easing trade war worries either.
It’s supposed to be a quiet day but there are still some interesting headlines, particularly
in M&A with Delivery Hero selling its German food delivery operations to Takeaway.com.
More Renault/Nissan drama unfolding with Japanese prosecutors re-arresting Carlos Ghosn.
For the miserable-feeling banking sector, Danske Bank, at the centre of an alleged money
laundering scandal, has no Christmas presents and has cut its 2018 outlook. Its shares are seen
falling 5 percent at the open.
And perhaps another sign that the gloomy 2018 isn’t gloomy by accident: European equity
raising slowed sharply in 2018, making it the biggest drag on falling global activity, Refinitiv
EUROPEAN FUTURES PUTTING UP A FIGHT! (0713 GMT)
European futures are actually putting up a fight and not far from positive territory, which
is slightly unexpected after yesterday's rout on Wall Street and Asia.
U.S. futures are also eking out gains, which suggests this session could maybe go better
Here's what it looked like at 0706 GMT:
MORNING CALL: NO REBOUND IN SIGHT YET (0626 GMT)
There's not much hope at the moment to see European markets rebound at the open today. IG
indicates that financial spreadbetters expect London's FTSE to open 13 points lower,
Frankfurt's DAX 174 points down and Paris' CAC to retreat 86 points.
points for the CAC.
"It's difficult to see what's going to move the needle in a positive direction", notes
Oanda's Stephen Innes after yesterday's rout on Wall Street.