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STOXX 600 up 0.3%
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RBA puts hikes on hold
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U.S. stock futures dip
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STOXX ON THE UP (0815 GMT) European shares kicked off the day on the good foot with some heavyweight bank, energy and pharma stocks driving the STOXX 600 up around 0.3% in early trading, although price action was pretty muted and lacking strong conviction. Sectoral moves ranged from the 0.1% drop for tech to the 0.8% rise for beaten-down real estate . Banks and energy added slightly to Monday's gains.
Here's your opening snapshot:
(Danilo Masoni)
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EUROPEAN FUTURES INCH HIGHER (0637 GMT) Europe shares were set to open a touch higher on Tuesday, as investors weighed up the outlook for further U.S. rate hikes following OPEC+'s decision to cut output, which boosted oil prices and revived concerns over inflation pressures.
EuroSTOXX50 and FTSE 100 futures were last up around 0.3% following slight losses in Asia overnight on weakness in rate-sensitive tech stocks, while U.S. futures pointed to a muted start later on Wall Street. In corporate news, eyes will be on Bayer after a U.S. judge dismissed a Merck lawsuit seeking to hold the German group responsible for more talc-related liabilities from its purchase of Merck's consumer care business in 2014.
L'Oreal was also in focus after the French cosmetics group agreed to buy Natura's Australian luxury brand Aesop at an enterprise value of $2.53 billion. Oil stocks could continue to rally although at a slower pace after clocking their biggest one-day gain since November on Monday following OPEC+'s surprise decision.
In M&A, European Union antitrust regulators late on Monday warned that Orange and MasMovil's $20 billion Spanish telecoms merger could reduce competition in Spain as they opened a full-scale investigation into the deal.
(Danilo Masoni)
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MARKETS EXHALE AFTER OPEC+ SHOCK; RBA HITS PAUSE (0556 GMT) Asian investors continued to weigh the impact of OPEC+'s surprise weekend decision to cut output, including what it means for bets that the Federal Reserve would turn less hawkish amid cooling inflation and a slowing economy. Energy shares boosted Japan's Nikkei and South Korea's Kospi , which hit a two-month high, but Chinese shares dragged on the region, with Hong Kong's Hang Seng a particular weight, led by declines for tech stocks. Crude oil continued to tick up, but not at Monday's pace, with Brent a little over $85. U.S. Treasury yields steadied after the previous day's steep slide, which had been driven by recession-level readings for the Institute for Supply Management (ISM) survey. That helped the dollar find its feet as well. Money markets lay 2:1 odds for the Fed to hike by another quarter point over a pause at their next meeting in a month from now. By contrast, the European Central Bank is seen as almost certain to tighten by a quarter point at its meeting around the same time. The outlook could be tested later on Tuesday when Europe producer price figures and consumer inflation expectations are due. The Reserve Bank of Australia, for its part, decided to press pause on its year-long rate hiking campaign - as most economists had predicted - amid signs that inflation may have peaked.
Meanwhile, there was some optimism from the Asian Development Bank in a report released on Tuesday, which upgraded its projection for the region's growth this year on the strength of China's post-COVID reopening. Geopolitically though, China is a wild card, at the same time offering itself as a mediator in the Ukraine conflict while increasingly flexing its military muscle. China has been for the first time keeping at least one nuclear-armed ballistic missile submarine constantly at sea, according to a Pentagon report. On the spy balloons that flew over sensitive military sites earlier this year, the Pentagon said it could not confirm an NBC News report that they were transmitting data back to China in real time. French president Emmanuel Macron will attempt to navigate those conflicting personas when he arrives in Beijing on Wednesday for an official visit.
Key developments that could influence markets on Tuesday:
Eurozone PPI German trade
ECB survey of consumer inflation expectations
(Kevin Buckland)
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