January 16, 2018 / 8:41 AM / 4 months ago

LIVE MARKETS-Opening snapshot: Europe heads higher

    * European stocks open higher
    * UK inflation due at 0930 GMT
    * Cyclicals under pressure

    Jan 16 (Reuters) - Welcome to the home for real time coverage of European equity markets
brought to you by Reuters stocks reporters and anchored today by Julien Ponthus. Reach him on
Messenger to share your thoughts on market moves: julien.ponthus.thomsonreuters.com@reuters.net
    
    OPENING SNAPSHOT: EUROPE HEADS HIGHER (0838 GMT)
    In the first half hour of trading, European shares are climbing higher. While it's a
broad-based move into positive territory, shares in banks and commodity stocks are notably being
left behind this morning on the back of a weaker oil price and a slide in copper prices.
    Here's your early snapshot:    
 
    (Kit Rees)
    *****
    
    WHAT WE ARE WATCHING (0750 GMT) 
    Major European bourses are expected to open slightly higher this morning, with a heavier
news flow and the U.S. markets reopening after MLK day.
    In the UK, all eyes will be on inflation, which is expected to have gone down from a 3.1
percent peak in November, giving a bit of room for manoeuvre to the BoE. 
    M&A and special situations are making the headlines with GKN facing pressure from activist
fund Elliott to engage with Melrose, Continental (according to sources) hiring JP Morgan for a
potential break-up and HSH Nordbank suitors J.C. Flowers and Cerberus beginning exclusive talks.
     The aftermath of Carillon’s collapse is also a period where its former rivals are under
intense scrutiny. 
    In terms of earnings, a number of blue chips have published trading updates such as
Peugeot, Hugo Boss, Lindt & Spruengli and Rio Tinto. French utility Engie said it hopes to boost
earnings growth in its core businesses of renewable energy, grids and energy services this year,
after an estimated five percent gain in core earnings in 2017. 
    While a number of strategists are advising their clients to start investing in banks in a
new world of rising yields, a headline today may look all too familiar with the last ten years. 
    Deutsche Bank, which is trying hard to convince investors that the bulk of financial
scandals it suffered this last decade is behind it, has been accused in a lawsuit of conspiring
to rig a Canadian rate benchmark.
    Still in the financial sector, ABN Amro said Q4 results would include several incidentals
regarding its operating income and expenses​.
    (Julien Ponthus) 
    *****
        
    A BUSY DAY FOR EUROPEAN FOOD AND RETAIL (0734 GMT)
    We're getting a flurry of updates in the food and retail sectors today.
    Hugo Boss reported quarterly sales growth driven by footfall in its own store
network. Swiss chocolate maker Lindt & Spruengli also posted higher sales. 
    In the UK, bakery chain Greggs reported a rise in Christmas sales and expects to
meet profit expectations in 2017. One trader sees Greggs' shares rising slightly. 
    JD Sports also had a strong Christmas and expects annual profit to be ahead of
expectations. JD shares only saw a moderate gain in 2017 after four years of stronger growth,
but perhaps today's update can push them higher.
    (Kit Rees)
    *****
    
    FUTURES POINT UP (0705) 
    European stocks futures have opened slightly higher, and while London, Paris and Frankfurt
seem set to open in positive territory, the picture is less clear with the pan-European market
and the Euro STOXX 50.  
    Here's the snapshot:  
 
    (Julien Ponthus)
    *****
    
    MISPLACED OPTIMISM ON UK INFLATION? (0645) 
    Consensus is that headline inflation in the UK edged down from the 3.1 percent peak it
reached in November and therefore back within 3 percent. The answer is due at 0930 GMT but some
analysts have voiced a few "what-ifs?". 
    "One can't help feeling that this optimism might well be misplaced", wrote CMC Markets
analyst Michael Hewson, noting that airfaires and fuel prices might have misbehaved in December.
    On the other hand and looking a bit further ahead, ING argues that slower than expected wage
growth could give the BoE room for manoeuvre. 
    "We caution that a 2018 rate hike still isn't a given - although admittedly it will be a
close call", the Dutch bank's analysts wrote.    
    (Julien Ponthus) 
    *****       
    
    MORNING CALL: EUROPE SEEN OPENING SLIGHTLY HIGHER (0615 GMT)
    Good morning. Financial spreadbetters see European shares rising slightly, with Germany's
DAX and Britain's FTSE 100 expected both to climb 8 points and France's CAC
 1 point.
    Asian shares closed higher, erasing early modest losses while the euro stood near a 3-year
peak on rising expectations that the European Central Bank could pare its monetary stimulus.
U.S. markets will reopen later today after being closed for a public holiday.
    (Julien Ponthus)

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