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LIVE MARKETS-Options indicate investors under-pricing OPEC volatility

* European shares rebound

* May faces Brexit showdown in Parliament

* U.S. futures rise

June 20 - Welcome to the home for real-time coverage of European equity markets brought to

you by Reuters stocks reporters and anchored today by Julien Ponthus. Reach him on Messenger to

share your thoughts on market moves: julien.ponthus.thomsonreuters.com@reuters.net

OPTIONS INDICATE INVESTORS UNDER-PRICING OPEC VOLATILITY (1114 GMT)

In the heady mix of risk events investors have had to keep tabs on in June, it seems like

OPEC has slipped under the radar - at least if option prices on crude and energy equities are

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anything to go by.

"Volatility expectations for this week's OPEC meeting are unusually low," note GS

strategists in an analysis of WTI, stock and ETF option prices.

The average U.S. energy stock with liquid options is implying a move of around 2.6 percent

this week, compared to a 2.8 percent average move over the past three years on OPEC day, they

find.

That's despite some concerning noises ahead of the meeting including Iran's oil minister

saying he doesn't expect OPEC to reach a deal on oil output.

Energy equities are still lagging oil and energy credit, GS also notes, though the gap has

narrowed recently (see below).

"We believe the OPEC meeting is a reason for investors to re-focus on the gap, driving

unusually high volatility," they argue.

Despite the potential for the OPEC meeting to send crude prices spiralling, Goldman

recommends buying calls on energy equities, saying these options are attractively priced.

(Helen Reid)

*****

BREXIT: TWO YEARS AFTER, THE UK IS ALREADY MISSING OUT (1045 GMT)

It didn't take long: two years after the June 23 vote and as Theresa May continues to

strugge to tame Parliament over her Brexit strategy, the UK is already missing out, the chief

economist of France's Ostrum Asset Management argues.

"The most striking impact of Brexit has been the lower growth momentum seen in the UK since

the referendum," Philippe Waechter writes.

To assess by how much, he calculated a GDP growth trend for the Euro zone and the UK based

on the data between 2013 to Q2 2016 and extrapolated it to Q1 2018. He then compared the results

with the actual GDP data.

"In the first quarter of 2018, French GDP is 1.8% above its trend, Germany is +1% and the

Euro Area +1.4% while the UK is 2% below it," he finds, meaning that "the UK has not taken

advantage of the strong growth improvement of the Euro Area in 2017".

For Waechter, things don't look rosy looking forward as "the uncertainty (over Brexit terms)

will remain, implying less capital inflows, people outflows leading to lower human capital and

lower capital expenditures". In these circumstances, monetary normalisation will also probably

have to wait, he says.

You can see on his chart below how the British GDP (purple) has deviated from its prior

robust trend:

And here's our latest on today's action:

Britain's May faces new battle in parliament over Brexit

(Julien Ponthus)

*****

HOW MUCH OF A TRADE WAR IS THE MARKET PRICING IN? (1012 GMT)

As trade war fears turn from anxiety into reality, the market has turned down significantly

and although it's recovering today, it's worth considering how much more there may be left for

traders and investors to price in.

"The broader sell-off in equities in the last few days is beginning to move the market away

from pricing in a narrow, sector specific impact, to a more significant impact," say UBS

strategists.

The announcement of potentially $200 billion of extra items to be targeted with tariffs has

hit Asian equities particularly hard, with China's Shenzhen suffering its worst fall in 4 1/2

months yesterday.

The danger investors sense, and the reason why the selloff spread to the broad market, is

that tariffs on one industry could snowball onto others connected in the supply chain.

"If our base case plays out and calm is restored, current sentiment is likely pricing in too

harsh an outcome," UBS (LSE: 0QNR.L - news) strategists say, adding, however that "a more negative outcome is far

from being priced in". Cyclicals are the stocks most in the firing line in Asia.

As you can see below, European cyclicals' shares have also been dented by the escalation in

trade tariffs, their performance declining relative to defensives:

(Helen Reid)

*****

OPENING SNAPSHOT: STOXX SET TO BREAK LOSING STREAK (0715 GMT)

European shares have opened in positive territory as immediate worries over a possible trade

war between the U.S. and China ease, putting the STOXX 600 up 0.6 percent, on course to

snap a three-day losing streak.

The bounce is broad based with all sectors in the black, while top movers on the STOXX

include Colruyt (EUREX: 11884447.EX - news) , up 9.5 percent following its full-year results, while Genmab (LSE: 0MGB.L - news) gained

after an upgrade from JP Morgan and VAT group (IOB: 0RFL.IL - news) fell following a price target cut at Credit

Suisse.

Here's your snapshot with Europe's main country benchmarks.

(Danilo Masoni)

*****

MORNING HEADLINE ROUNDUP: DEALMAKING IN FOCUS (0643 GMT)

European shares are expected to open higher but not enough to erase yesterday losses, let

alone the pain suffered since last Friday when the trade dispute between the U.S. and China

intensified. The reassuring news of a Franco-German deal on the future of the Euro zone is

clearly not enough to compensate.

Theresa May’s Brexit showdown in Parliament could also animate the session in the UK with a

possible impact on the pound.

Here are the main headlines that caught our attention this morning and looks there is some

dealmaking activity that could liven up the session:

DSM to target acquisitions for nutritional division

French utility Engie (LSE: 0LD0.L - news) to get 2.6 bln euros from Glow Energy sale

VW, Ford confirm talks on possible commercial vehicle tie-up

Dialog Semiconductor (LSE: 0OLN.L - news) to proceed with due diligence to take over Synaptics

Ferragamo family holding to sell 3.5 percent in Italian luxury group

BHP to sell Chilean copper mine to private equity fund

Basler Kantonalbank Intends To Increase Stake In Bank Cler To 100 Pct

UK builder Berkeley beats profit expectations

Legal & General (LSE: LGEN.L - news) targets 8-10 percent profit growth with new strategy

U.S. Marines award amphibious vehicle deal to BAE

Maersk family foundation to pump money into hot water heating

Maersk poaches new finance chief from Assa Abloy (LSE: 0R87.L - news)

Norwegian salmon export price up to NOK 65.00 last week -SSB

Richemont announces delisting of ordinary shares of Yoox Net-A-Porter

Swiss gearmaker Klingelnberg prices IPO at 53 Sfr per share

Caterpillar (LSE: 0Q18.L - news) , Volvo, Komatsu (Other OTC: KMTUF - news) linked to mining abuses in Myanmar - report

(Danilo Masoni)

*****

EUROPEAN FUTURES RISE AT THE OPEN (0615 GMT)

European futures have opened up but not enough to erase yesterday's losses.

Concerns that the trade dispute between China and the U.S. could yet further escalate is

keeping investors on their toes.

(Julien Ponthus)

*****

MISERY LOVES COMPANY: DOW JOINS EUROPEAN INDEXES WITH YTD LOSS (0606 GMT)

The pan-European STOXX is no longer standing alone in negative territory for 2018: it has

been joined by the Dow Jones, which is now posting a year-to-date loss of 0.08 percent.

Wall Street closed lower on Tuesday as the escalation in the trade dispute between the

United States and China rattled markets.

One noticeable fact is that tech shares on both sides of the Atlantic (Shanghai: 600558.SS - news) remain clear winners

with the Nasdaq (Frankfurt: 813516 - news) and the European tech index comfortably up over 10 percent.

(Julien Ponthus)

*****

MORNING CALL: POSITIVE OPEN IN SIGHT (0528 GMT)

European shares are expected to open slightly higher this morning. The rise foreseen by

spreadbetters could nevertheless fall short of the kind of rebound one could expect after three

sessions in the red.

In China, the Shanghai Composite Index is back in positive territory, up 0.2 percent in

choppy trade, a day after falling 3.8 percent to a two-year low. MSCI (Frankfurt: 3HM.F - news) 's broadest index of

Asia-Pacific shares outside Japan rose more strongly, over 1 percent.

Financial spreadbetters expect London's FTSE to open 15 points higher, Frankfurt's DAX 5

points up and Paris' CAC to rise 13 points.

(Julien Ponthus)

*****