February 5, 2018 / 7:25 AM / in 3 months

LIVE MARKETS-Futures point to sharp sell-off in European stocks as yields rise

    Feb 5 (Reuters) - Welcome to the home for real time coverage of European equity markets
brought to you by Reuters stocks reporters and anchored today by Helen Reid. Reach her on
Messenger to share your thoughts on market moves: helen.reid.thomsonreuters.com@reuters.net
 
 
 
    FUTURES POINT TO SHARP SELL-OFF IN EUROPEAN STOCKS AS YIELDS RISE (0721 GMT)
    Futures have opened sharply lower across the main benchmarks, with drops of 0.7 to 1.1
percent. Meanwhile Germany's 10-year government bond yield has risen to its highest level since
September 2015 - so the yield pressure looks like it's here to stay today as well. 
 
 
 (Helen Reid)
    *****
    
    EURO AREA PMIS COULD PUSH YIELDS HIGHER (0653 GMT)
    Euro area PMIs today at 0900 GMT will provide a read on growth in the region, but economists
at Societe Generale reckon stocks may not take the data well even if it points to strong
activity.
    "These have the potential to maintain upward pressure on yields if they suggest strong
underlying growth momentum. Strong growth will provide little solace for equities or commodities
if it pushes bond yields higher," write SocGen analysts.
    They add that the sell-off in bonds has been more aggressive than they had anticipated. The
past week was "a tough one for asset markets" and this one could be more of the same.
    
    (Helen Reid)
    *****
    
    
    "EXTREMELY WELCOME NEWS FOR ACTIVE" (0638 GMT)
    Bernstein's global quantitative analysis team finds a pick-up in performance for active
managers and signs they could continue to do well this year, a godsend after years of
disappointing returns for the industry. 
    European portfolio managers and global quantitative managers beat benchmarks by 3.3% and
1.9% on average in 2017, Bernstein finds, and this strong performance has continued into 2018.
    Stock and factor correlations at multiyear lows create optimal conditions for active
management and stock picking. "Even if are unlikely to go lower from here, the
current levels suggest a rich opportunity set for stock pickers for the next 12 months," write
Alla Harmsworth and team. 
    Intra-sector correlations are at 20-year lows on both sides of the Atlantic, and valuation
spreads are wider than usual across the whole market and within sectors, they note. 
    "This suggests a heightened potential ability to identify idiosyncratic 'winners' even
amongst peers within narrow market segments," says Harmsworth.
    It'll be interesting to see whether this low correlation environment continues even if the
stocks rally starts to peter out.
    
    (Helen Reid)
    *****
    
    MORNING CALL: SELL-OFF TO SPREAD TO EUROPE (0618 GMT)
    Good morning and welcome to Live Markets. 
    European stocks are in for a turbulent start to the week after a sharp sell-off in Asian
shares overnight, with fears of resurgent inflation taking their toll on markets near record
high levels.
    Asian shares fell the most in more than a year, tracking a much weaker Wall Street session
after Friday's U.S. payrolls report showed wages growing at their fastest pace in more than 8
years.
    Spreadbetters call the DAX 153 points lower at 12,632.4, the CAC 40 down 64 points at
5,300.7, and the FTSE down 79 points at 7,364.
    (Helen Reid)
    *****

    
 (Reporting by Danilo Masoni, Helen Reid, Kit Rees and Julien Ponthus)
  
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