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STOXX 600 up 0.1%
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Staples up, financials top drag
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Eurozone core prices surge
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S&P 500 futures dip
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STRONG CHINA, WEAK DOLLAR (1220 GMT) China's factories are finally recovering. Official PMI data released on Wednesday showed manufacturing activity grew at its fastest pace in more than a decade, while a private sector survey showed growth for the first time in seven months. In a note published on Wednesday, CitiFX strategists said they see a "tactical downside" on the dollar versus high-beta currencies such as Norway's krone and the New Zealand and Canadian dollars, given China's improving growth outlook.
"We are adjusting our portfolio to position for a potential risk rally led by renewed China optimism," CitiFX wrote, also highlighting the possibility of a softening in U.S. labour market data for their view.
The firm has opened three trade ideas:
* Short USD/NOK at 10.40 with a take profit (TP) at 9.90 and
stop
loss (SL) at 10.62
* Short USD/CAD at 1.3610 with a TP at 1.33 and SL at 1.3760
* Long NZD/USD at 0.6250 with a TP at 0.6538 and SL at
0.6131
The strategists have also taken profit on their short
AUD/USD position and are exiting their long EUR/NZD position for
a loss.
(Samuel Indyk)
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WANT TO BOOST YOUR SHARE PRICE? MOVE TO AMERICA! (1129 GMT)
If the mountain won't come to Muhammad then Muhammad must go to the mountain, goes an old saying, and it does look like some UK executives seeking to boost their company's share prices are indeed thinking along these lines. Take Shell . The Financial Times reported last week that top executives at the Anglo-Dutch energy including CEO Wael Sawan discussed moving listing and headquarters to the U.S.. The idea - a potential blow to London as a financial hub -was ultimately dismissed, the report said, even though for Shell a relocation could have the advantage of lifting its share price further by the means of a higher U.S.-level valuation multiple.
European and UK companies are typically much cheaper than their U.S. peers, and some analysts believe the deep discount boils down to market factors with the bigger capital depth of Wall Street that helps lift U.S. multiples. The report about Shell discussing a move to America comes after talk of U.S. takeovers. In January, Alastair Syme, head of energy research at Citi, advocated a re-run of the industry consolidation seen 20 years ago, saying transatlantic mergers were the only way for European majors to fill the value gap. But any U.S. takeover would likely stumble on government opposition. "Nice in theory, but impossible in practice," says Andrea Scauri, portfolio manager at Lemanik. "European states won't hand over governance of such sensitive companies". So maybe a relocation is less complicated. Building materials firm CRH is planning to move its listing to New York, the FT reports. Online betting firm Flutter , which is also eyeing Wall Street, said today that feedback from shareholders has been supportive. In 2022, plumber Ferguson left the FTSE 100 for the NYSE.
The MSCI UK currently trades at 10.5 times 12-month forward earnings, a 42% discount compared to the MSCI USA , according to Refinitiv data.
(Danilo Masoni)
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STOXX 600 AT ONE MONTH LOW (0855)
European shares dropped to a one-month low on Thursday in advance of closely-watched inflation numbers that could set the outlook for European Central Bank's rates and could send decade-high interest rates up even higher.
The STOXX 600 index slid 0.55% to its lowest since Feb. 2, hurt by banks down 1.7% and tech stocks the latter falling alongside drops in Tesla's Frankfurt listed shares , which lost 5.4% a day after the company held an investor day.
A preliminary reading of harmonised euro zone inflation for February is due at 1000 GMT on Thursday, and higher-than-expected inflation readings from the Netherlands earlier today and from France and Germany earlier in the week are a poor omen for those hoping the data will show price pressures are easing.
European government bond yields rose to fresh multi-year highs in early trading. Germany's DAX lost 0.86%, France's CAC40 shed 0.77%, though the materials sector helped Britain's FTSE 100 to hold up a little better, it was down 0.2%.
M&G shares are up 3.3% after Sky News reported Australian investment bank Macquarie Group Ltd is at the early stages of exploring a takeover bid of over 5 billion pounds ($6.00 billion) for British money manager.
Alun John
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FUTURES DIP AHEAD OF FLASH INFLATION (0741)
European shares were heading for a softer open ahead of key inflation numbers that could drive expectations of more aggressive European Central Bank rate hikes and send decade-high interest rates up even further.
A preliminary reading of harmonised euro zone inflation for February is due at 1000 GMT on Thursday, and higher-than-expected inflation readings from the Netherlands earlier today and from France and Germany earlier in the week are a poor omen for those hoping the data will show price pressures are easing.
European government bond yields rose to fresh multi-year highs in early trading. Eurostoxx 50 March futures dropped 0.43%; German Dax futures slipped 0.3%; though British FTSE100 futures held up a little better trading flat. In company news, eyes will be on M&G shares at the open after Sky News reported Australian investment bank Macquarie Group Ltd is at the early stages of exploring a takeover bidof over 5 billion pounds ($6.00 billion) for British money manager Germany's Merck KGaA said its 2023 earnings would slip due to a decline at its electronic chemicals unit and a drop in COVID-related demand, and London Stock Exchange Group reported slightly above consensus results for 2022, and announced plans to seek shareholder approval for a buyback directed at shares owned by Blackstone and Thomson Reuters, the owner of Reuters News.
(Alun John)
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MORNING BID EUROPE-EU inflation risks loom large for markets (0530GMT)
Asian markets had thought to bask in the glow from Wednesday's radiant PMI data from China, and the region in general. Taiwan, Thailand and Vietnam all enjoyed a pick-up in activity, while JPMorgan's global manufacturing PMI rose nearly 2 points to an eight-month high of 50.8. The hopeful mood, however, could not survive Elon Musk's "Master Plan". Seems his three-hour YouTube live stream was big on robots and saving the planet but short on new vehicles, specifically a much-awaited small and affordable EV. Tesla's shares duly sank 5.6% after the bell, erasing around $36 billion in market worth, and dragging Nasdaq futures down 0.5% in Asian hours. Adding insult to injury was a further tick up in 10-year Treasury yields to a four-month top of 4.018%, while two-year yields reached their highest since 2007 at 4.921%. Investors are still smarting from a spike in the prices paid component of the ISM manufacturing survey to 51.3, the highest in five months and well above its December trough of 39.4. That saw Fed funds shift to price in a near one-in-three chance the Federal Reserve could hike rates by 50 basis points on March 22. Markets are now leaning toward a peak of 5.50%-5.75%, compared with 5.0% just a month ago. Futures have also now taken more than 100 basis points of rate cuts out of 2024, a remarkable turnaround for one month. And they are hardly alone. Back in mid-January, Euribor futures had implied ECB rates would end 2024 at 2.4%. Now it's 3.4%. Markets are fully priced for a 50bp hike on March 16, with even a non-trivial chance of 75bp, and are flirting with another 50bp in May. That leaves a lot riding on what EU (HICP) inflation figures for February show later on Thursday. Median forecasts are for an annual figure of 8.2%, but risks are on the upside following the surprises from France, Spain and Germany. There's even talk of 8.5% or more, a result that would really shake the world of bonds.
Wayne Cole
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