European Factors to Watch - Equities seen boosted by Obama win

Wed Nov 7, 2012 7:46am GMT

LONDON, Nov 7 (Reuters) - Europe's main stock indexes are seen pushing
higher at the open on Wednesday after a U.S. election victory for President
Barack Obama removed uncertainty over leadership of the world's biggest economy.
    Financial spreadbetters said buying activity picked up after Republican
challenger Mitt Romney conceded the election, with the Obama win also expected
to spell the continuation of easy monetary policy and low interest rates at the
Federal Reserve. 
    However, gains are likely to be limited as attention switches to the "fiscal
cliff" of some $600 billion of spending cuts and tax increases that threaten to
send the United States back into recession next year. To avoid the grave
consequences for the economy and markets, Obama now faces tough negotiations.
    "Of course there were fears that this was much closer than what it's ended
up being. The initial reaction is that it's positive that there is no political
deadlock and that there is some sort of result but it's likely now that the
focus will switch on to the other issues like the fiscal cliff and budget
deficit," said Ioan Smith, strategist at Knight Capital.
    "That divide remains the real political crisis as we approach the end of the
year." 
    Futures for Euro STOXX 50 and France's CAC added 1.0
percent, while those for Germany's DAX and Britain's FTSE gained
0.8 percent each by 0738 GMT.
    Futures on the U.S. benchmark S&P 500 rose 0.4 percent to 1,430.70 points,
reversing overnight losses after hitting a session low of 1,411.20. 
    "This looks like a classic quantitative easing response ... There had been
some concern in the run-up to the election that a Romney victory would translate
to premature monetary (and fiscal) tightening, so today's outcome should
reinforce expectations for easy policy to be in place for longer," strategists
at Citi said in a note.
    "The question is whether or not there is scope for this knee-jerk response
to extend in the hours and days ahead."
    The EuroSTOXX 50 added 0.7 percent to 2,534.86 points on Tuesday in light
volumes, at just 48 percent of the 90-day daily average. 
    The euro zone benchmark index has been stuck in a consolidation range of
around 160 points since hitting multi-month highs at 2,604.77 in mid-September,
with a mixed corporate earnings season and ongoing concerns about the euro zone
crisis.
    The latter remained in focus on Wednesday, with the Greek coalition
government facing a parliamentary vote on an unpopular austerity package needed
to secure the next tranche of an international bailout and avert bankruptcy. The
measures are expected to pass with narrow majority. 
    Euro zone retail sales and German industrial output data for September will
offer further signs of the depth of the crisis in the region, which has
increasingly forced European firms to look abroad for profit growth.
    Weakness in Europe pushed Danish brewer Carlsberg to miss
analysts' forecasts on quarterly operating profit. Adding to gloomy corporate
newsflow, Dutch financial group ING unveiled job cut plans in insurance
and commercial banking divisions, while Europe's No. 2 insurer Axa 
lowered targets for coming years.
    On the upside, Alstom reported a rise in orders and Delhaize beat
profit expectations by cutting costs.
--------------------------------------------------------------------------------
  MARKET SNAPSHOT AT 0738 GMT: 
                                          LAST     PCT CHG    NET CHG
 S&P 500                              1,428.39      0.79 %      11.13
 NIKKEI                               8,972.89     -0.03 %      -2.26
 MSCI ASIA EX-JP                                    0.86 %       4.48
 EUR/USD                                1.2873      0.47 %     0.0060
 USD/JPY                                 80.26      -0.1 %    -0.0800
 10-YR US TSY YLD                        1.723          --      -0.03
 10-YR BUND YLD                          1.462          --       0.03
 SPOT GOLD                           $1,728.60      0.77 %     $13.26
 US CRUDE                               $88.80       0.1 %       0.09
 
  > GLOBAL MARKETS-Dollar slips, Treasuries gain as Obama re-elected 
  > US STOCKS-Futures off lows as election called for Obama 
  > Nikkei recoups losses after Obama victory; Nissan rises 
  > TREASURIES-Bonds reduce losses, impact of jobs data fades 
  > FOREX-Dollar falls broadly after Obama heads for re-election 
  > PRECIOUS-Gold hits 1-week high, all eyes on U.S. vote 
  > METALS-LME copper rises as projected Obama win hits dollar 
  > Brent holds below $111 on demand worries, Middle East tension 
    
 
    * NOKIA - The No. 2 U.S. mobile provider  AT&T set a $50
starting price for Nokia's latest Windows smartphones, which the struggling
Finnish phone maker is pinning its hopes on for a turnaround. It will sell the
Nokia Lumia 820 for $49.99 and the flagship Lumia 920 phone for $99.99
undercutting key rivals. 
    * CARLSBERG - The Danish brewer's third-quarter operating profit
rose nearly 10 percent to 3.60 billion Danish crowns ($617.75 million), slightly
lagging market estimate, as Western Europe sales remained sluggish.
    * DELHAIZE - The Belgium-based supermarket group beat
third-quarter profit expectations as it paid lower bonuses in the United States
and cut costs. 
    * MUNICH RE - The re-insurer raised its full year net profit
target to around 3 billion euros ($3.84 billion) after surging investment income
and moderate damage claims helped it beat the highest forecast in a Reuters poll
for third quarter net profit. 
    * HOLCIM - The Swiss cement maker is banking on rising demand for
cement in emerging markets and North America to shield it from lower sales in
Europe for the rest of 2012.
    * BURBERRY - The British luxury goods group beat forecasts with a 6
percent rise in first-half profit as its most wealthy shoppers continued to
spend despite a faltering global economy. 
    * BNP PARIBAS - BNP Paribas posted forecast-beating third-quarter
results on the back of strong capital-markets trading and a drop in euro zone
losses, helping it meet balance-sheet targets ahead of schedule. 
The bank is to focus on cutting costs as Europe's economic slowdown deepens, its
chief executive told Reuters Insider television. 
    * ALSTOM - The French transport and power engineering company
posted an 11 percent rise in first-half net income on Wednesday on the back of a
4 percent increase in sales. 
    * AXA - Europe's No. 2 insurer said it expected underlying
earnings per share growth to remain in a 5 to 10 percent range between 2010 and
2015, in contrast to a previous 10 percent target. 
    * RENAULT - The automaker demanded pay and working time
concessions from its French workers and warned that the outcome of talks may
affect future production plans, unions said. 
    * L'OREAL - Sales trends continued to worsen by the end of
September for the third quarter running, particularly for its luxury and
professional products, the world's biggest cosmetics group said. 
     
    * BARRY CALLEBAUT - The world's largest maker of chocolate products
reported better-than-expected results for its 2011/12 financial year despite the
difficult environment in Europe.
    * BHP BILLITON - The top global miner has started hunting for a new
chief executive in a process that could take one to two years, the Financial
Times reported. 
    * NOVARTIS - An experimental Novartis drug to treat hospitalized
acute heart failure patients reduced deaths by 37 percent compared with a
placebo and appeared to be safe, according to a late stage clinical trial.
    * ROCHE - The world's biggest maker of cancer drugs said U.S.
health regulators granted a priority review to its experimental breast cancer
drug TDM-1, expediting the review process for the marketing application of the
drug. 
    *  INTESA SANPAOLO - The chairman of Intesa Sanpaolo's supervisory
board on Tuesday denied ever discussing any plans for a merger with Unicredit
, following media talks over a potential defensive tie-up with Italy's
biggest bank by assets. 
    * HOCHTIEF - The builder said its 2012 earnings target would be
challenging to meet as it reported Q3 pretax profit of 279.5 mln eur.
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