*
STOXX 600 up 0.7%
*
U.S. futures rise
*
China economy shows strength
*
Fed official calls for "slow and steady" approach
Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You
can share your thoughts with us at .
ECB RATE HIKES COULD IMPLY STOXX 600 BIG FALL (1115 GMT) European Central bankers policymakers' latest reminders that a rate hike in March is unlikely to be the last one in the fight against sticky inflation is likely to add to the pressure on European stocks The ECB already indicated it would raise rates by half a point in March and markets now expect another 100 basis points on top of that this year.
That will imply 20% downside for the STOXX 600 and 15% underperformance for European cyclicals versus defensives by the third quarter, according to BofA strategists.
"European equities are priced for growth to continue rebounding, but we expect a sharp loss of growth momentum ahead, as the impact of monetary tightening filters through to the real economy," they say.
They stay negative on European equities, and are underweight cyclicals versus defensives.
(Joice Alves)
******
WILL NI DEAL HELP REDUCE UK EQUITIES DISCOUNT? (1045 GMT) British Prime Minister Rishi Sunak was in Northern Ireland earlier this week selling his new deal with the European Union to ease post-Brexit trade. But what does the deal spell for UK equities, which remain undervalued compared to historical levels and compared to their peers?
Frédérique Carrier, head of investment strategy for RBC Wealth Management in the British Isles, is optimistic that the deal could help restore investors’ interest in the UK stocks market.
The current discount to U.S. equities is warranted, in her view, due to differences in sector bias and a more resilient outlook for the U.S. economy, though she points out that UK-listed energy majors still trade at levels "substantially less than U.S. peers" despite equally international revenue streams.
The MSCI UK Index trades on 10.4 times forward consensus earnings estimates, below a historical median of 12.5 times and the MSCI USA Index at 18, Carrier writes.
Brexit ignited investors' fears of political instability and regulatory uncertainty and UK stocks have underperformed since.
"The economic damage wrought by Brexit uncertainty cannot be undone, and the cost of living crisis in the UK shows scant signs of lifting," says Carrier.
But her outlook remains somewhat optimistic.
"A more constructive approach by the UK to its relationship with its main trading partner
could go some way to start to restore investors’ interest in the UK’s undervalued equity
market."
(Lucy Raitano)
*****
STOXX SET FOR WEEKLY GAINS, CHINA AND FED SUPPORT (0840 GMT) Comments from a U.S. Federal Reserve official about a potential pause in monetary tightening prompted investors to take on risky assets, which has sent European stocks higher. The pan European STOXX 600 index is up 0.55%, set for a weekly gain of 1.1%. Rate-sensitive sectors like tech stocks and euro zone banks are up 1%.
The basic resource index is up 1.5%, supported by the prospect of strong economic recovery in China, as evidence points to the world's second-biggest economy making a steady rebound after the government ditched its stringent COVID controls in December. In terms of single stocks, Lufthansa is leading the gains, up 5%, after the German airliner returned to a positive result in 2022 thanks to a strong increase in demand for air travel.
(Joice Alves)
****
FED, CHINA SEEN LIFTING EUROPEAN STOCKS (0744 GMT)
European shares are seen opening higher, mirroring Asian and Wall Street markets, which found support from remarks by the Atlanta Federal Reserve chief that signalled a measured approach to raising U.S. interest rates. The prospect of an economic recovery in China is also lending support to stocks, as investors' appetite for holding riskier assets has improved on signs that the world's second-biggest economy is making a steady rebound after the government ditched stringent COVID controls in December. Atlanta Fed President Raphael Bostic took some steam out of the dollar and the breathless advance in U.S. yields, saying "slow and steady is going to be the appropriate course of action," despite new job figures adding to the run of strong data of late. The pan European index is set for weekly gains despite this week's data showing that euro zone inflation remained stubbornly high last month, bolstering fears of more European Central Bank rate rises.
(Joice Alves)
*****
FED'S 'SLOW AND STEADY' LIFTS MARKET MOOD (0724 GMT) All it took was a bit of a hint that the Federal Reserve may stick to its moderate monetary tightening path for the market to attempt a risk-on rally to end the week. Futures indicate that the buoyant mood is set to continue in Europe, with the continent-wide STOXX 600 looking to end yet another week with gains. The index has so far this year registered just three weeks of losses. While Fed officials wrestled on Thursday with whether a recent string of resilient economic data was a "blip" or a sign that even higher interest rates could be required to slow price rises. Markets took their cues from comments from Atlanta Fed President Raphael Bostic.
"Slow and steady is going to be the appropriate course of action," he said, arguing for quarter point hikes. And so, the dollar eased and was on track to clock its first weekly loss since January, while the MSCI Asia ex-Japan index was set to snap its fourth weekly losing run. Also helping lift sentiment was services sector data from China, reviving the optimism that a robust recovery was well underway. The Caixin/S&P Global services purchasing managers' index (PMI) rose at the fastest pace in six months to 55.0 in February from 52.9 in January. Investors will be keenly focused on China's annual parliament session on Sunday when Beijing will set its economic goals for the year. But before that, focus swings to the U.S. services ISM for February, scheduled to be released later on Friday. Meanwhile, data showed core consumer inflation in Japan's capital Tokyo slowed in February, though an index stripping away the effect of fuel hit a fresh three-decade high in a sign of broadening inflationary pressures. The latest data is likely to keep the pressure on the Bank of Japan to shift away from its ultra loose monetary policy.
In the corporate world, Microsoft is expected to secure EU antitrust approval for its $69
billion acquisition of gaming firm Activision with its offer of licensing deals to rivals,
Reuters reported.
Key developments that could influence markets on Friday:
Economic events: Eurozone, Germany and France S&P Global services final PMI for February
(Ankur Banerjee)
*****
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Fed, ECB and BoE 'terminal rates' rise China to set growth target for 2023 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
