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STOXX 600 down 0.7%
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FTSE 100 slips from all-time high
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All sectors in the red
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A CASE OF THE MONDAY BLUES FOR THE STOXX (0909 GMT) European shares have started the new week in the red as markets grasp with the idea that interest rates will remain at higher levels for longer after Friday's blowout jobs report. Economists and analysts think the strong jobs numbers could see the Fed lift its target rate above the recently projected 5.1% and keep it there for some time. Europe's benchmark STOXX 600 is last down around 0.7%. Germany's DAX is dropping 0.8% and France's CAC 40 is losing 1.1%.
Britain's FTSE 100 is off 0.8% after reaching its all-time intraday peak of 7,906.58 late on Friday afternoon. Geopolitical tensions are also weighing after the U.S. shot down a suspected Chinese spy balloon over the weekend, prompting Washington to cancel a planned visit to Beijing by Secretary of State Antony Blinken. "The nervousness about what an escalation in tensions could mean for global growth is likely to limit another immediate heady ascent for stocks," says Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown. All the main sectors in Europe are lower, with underperformance in Tech , Real Estate and Miners .
Here's your opening snapshot:
(Samuel Indyk)
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IMPROVING MACRO DRIVING S&P 500 HIGHER, UPSIDE LIMITED - GS (0857 GMT)
Analysts at Goldman Sachs lift their short term S&P 500 target, thanks to an
improvement in U.S. and global macroeconomic data, which has already helped the benchmark index
gain 8% year-to-date.
The Wall Street bank raises its three-month S&P 500 target to 4000 from 3600, but makes no
change to its year-end target of 4,000. The S&P 500 closed Friday's session at 4,136.48.
"Recent macro developments have strengthened our economists' confidence in a soft landing
and reduced equity downside risk in the near term," the bank says.
They add that growth prospects have "brightened" with earlier-than-expected China reopening,
Europe avoiding a recession following a warmer winter, and limited near-term upside to U.S.
treasury yields.
Despite the recent rally in the S&P 500, Goldman Sachs sees limited upside to U.S. equities
as a soft landing is already priced in. The bank says valuations are elevated compared to
historical levels and will remain constrained by eventual interest rate hikes.
(Roshan Abraham)
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EUROPE EYES WEAK OPEN (0732 GMT)
Futures in Europe are signalling a lower open on Monday after Friday's U.S. payrolls data
supported the higher for longer rates mantra, while geopolitical tensions flared after the U.S.
shot down a suspected Chinese surveillance balloon on Saturday.
Futures on the euro STOXX 50 are shedding around 0.8% while futures on the other major European bourses are down between 0.4%-0.9%.
Wall Street futures are also heading lower and MSCI's broadest index of Asia-Pacific shares outside Japan was last down 2.1%.
Miners will be closely watched at the open after gold producer Newmont made a $16.9 billion bid for Australian peer Newcrest Mining , the bid at a 21% premium to the pre-announcement price.
Meanwhile, it's set to be another busy week on the corporate earnings front with reports scheduled from some of Europe's largest listed companies. These include BP (Tue), BNP Paribas (Tue), Linde (Tue), TotalEnergies (Wed), Unilever (Thu), AstraZeneca (Thu), L'Oreal (Thu) and Siemens (Thu).
(Samuel Indyk)
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HOT AIR (0653 GMT)
Last week, the Federal Reserve and the European Central Bank raised interest rates as expected and flagged that credit conditions would remain as tight as necessary to tame inflation. Still, stocks rallied and bond yields fell as markets priced in lower rates. The two asset classes enjoyed one of the best Januaries on record. Now, it appears that some of these expectations were a load of hot air. And just as a U.S. military fighter jet shot down a suspected Chinese spy balloon, Friday's blowout U.S. jobs growth data has dashed market hopes that the Fed was close to pausing its monetary policy tightening cycle. Futures are almost fully priced for a quarter point rate rise in March, and likely another in May, leaving the peak at 5.0%, compared with 4.9% ahead of the jobs data. The U.S. jobs data showed the unemployment rate hit more than a 53-1/2-year low of 3.4%. On Monday, as investors pondered U.S. rate increases, Asian equity markets fell 1.9% and were heading for their worst day in three months. The safe-haven dollar strengthened after its recent underperformance. U.S. stock futures traded lower and FTSE futures indicated a weaker start for British stocks , which vaulted to a record high on Friday. European index futures also traded lower. Meanwhile, ECB Governing Council member Ignazio Visco, who is also the Bank of Italy's governor, said on Saturday that the ECB could take a cautious approach to increasing interest rates as short-term inflation expectations had dropped sharply and longer-term ones remained under control. The ECB raised its key rate by 50 basis points to 2.5% last week and said it would replicate the move in March. This week, investors will focus on results from a swathe of companies, including BP , Unilever and banks such as BNP Paribas , Societe Generale and troubled Credit Suisse . In Britain, tens of thousands of nurses and ambulance workers were set to walk out on Monday in an escalating pay dispute with the government, in a move that spelt further disruption for an already strained health system. The walkout, largely in England, will represent the biggest in the 75-year history of the National Health Service. Another record was set at the Grammy awards, but a happy one for pop superstar Beyonce, who broke all-time Grammy wins on Sunday by picking up four and was in the running for more, including the prestigious best album accolade. Key developments that could influence markets on Monday: Economic data: Euro zone Feb sentix survey, Dec retail sales; Global PMIs Jan, final; German Dec industrial orders;
U.S. results: Hasbro, Simon Property
(Anshuman Daga)
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