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LIVE MARKETS-As UK's political crisis deepens, a glimmer of hope in Italy

Stock Markets Sep 13, 2019 15:21
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© Reuters. LIVE MARKETS-As UK's political crisis deepens, a glimmer of hope in Italy
 
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* European stocks close lower: STOXX 600 -0.2%, CAC 40 -0.3%

* The U.S. Treasury yield curve inversion deepens

* UK's domestically focused stocks hit by fresh Brexit worries

* Weak sterling boosts FTSE 100 Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Thyagaraju Adinarayan. Reach him on Messenger to share your thoughts on market moves: thyagaraju.adinarayan.thomsonreuters.com@reuters.net

AS UK'S POLITICAL CRISIS DEEPENS, A GLIMMER OF HOPE IN ITALY (1602 GMT)

UK stocks and the country's broader financial markets took centre stage today as the country's political crisis deepened after PM Johnson moved to suspend Parliament in what was seen as a bid to prevent a push to prevent a no-deal Brexit.

Shares most exposed to the economy from housebuilders to airlines getting hit hardest, in a market reminiscent of those late last year when Johnson's predecessor Theresa May was facing a vote of no confidence and fighting to get approval in parliament for her deal.

"Today's development brings us firmly into the realms of a 'Constitutional Crisis'," says Derek Halpenny, head of research for global markets EMEA and international securities at MUFG.

The weaker pound helped buoyed the exporter-heavy FTSE 100, but with two months before the Oct. 31 Brexit deadline, investors shunned the FTSE 250, which ended down 0.6%.

As the UK's political upheaval continued, Italy appeared to be nearing the end of its latest turmoil - opposition Democratic Party (PD) said it was ready to form a coalition with the 5-Star Movement, setting aside years of hostility to avert a snap election and ease economic uncertainty. Milan's blue chips .FTMIB ended flat, reversing earlier losses. Mason)

*****

FRESH NO-DEAL BREXIT WORRIES ROIL UK HOUSEBUILDERS, AIRLINES (0922 GMT)

Brexit-sensitive sectors such as airlines and housebuilders sink this morning on reports British government will seek to extend the Parliament recess until Oct. 14, as part of a drive to prevent politicians from derailing its Brexit plan.

The move induces fresh worries that UK's Johnson could force through a no-deal Brexit.

Two traders view it as "obstructing a democratic process".

"Although the queen does not interfere in politics, I think this is a new dimension in trying to obstruct a democratic process," one trader says.

British Airways-owner ICAG.L and Wizz Air WIZZ.L shares slide 2%, while easyJet (LON:EZJ) slumps 4%. Shares of housebuilders Persimmon PSN.L , Taylor Wimpey TW.L and Berkeley BKGH.L fall about 2%.

Meanwhile, FTSE 100 .FTSE index is bouyed by a brutal sell off in sterling (-0.9%). Export-oriented stocks Reckitt Benckiser RB.L , Astrazeneca AZN.L , Rio Tinto RIO.L , BP BP.L and BHP BHPB.L are boosting the blue-chip index.

Other risers are UK-focused retailers Tesco TSCO.L , WM Morrison Supermarkets MRW.L and Sainsbury's SBRY.L .

(Thyagaraju Adinarayan)

*****

RECESSION FEARS ARE BACK, AUTODESK WARNING HITS TECH STOCKS (0737 GMT)

European stocks open down 0.4%, dragged down by tech stocks, as investors stay away from risky bets amid rising recession fears and escalating trade war between U.S. and China.

The U.S. Treasury yield curve inversion, a key recession signal, deepened further.

European tech stocks are selling off hurt by a weak earnings update from U.S. software company Autodesk (NASDAQ:ADSK), which plunged 11% overnight. Software names are top fallers in Europe with Nemetschek down 2.4%, SAP SAPG.DE -1.2%, Aveva Group AVV.L -1.5%.

Oil and mining stocks edge higher helped by rising commodity prices.

As expected British tobacco stocks BAT BATS.L and Imperial Brands IMB.L are sliding this morning after Philip Morris (NYSE:PM) PM.N and Altria (NYSE:MO) MO.N discuss potential merger. Analysts say the combined U.S. tobacco firm could create a more potent next generation products competitor.

In single stocks, Royal Unibrew shares are soaring 8.5% to record highs after it reported an estimate-beating Q2 results and raised its 2019 outlook. your opening snapshot:

(Thyagaraju Adinarayan)

*****

MIXED OPEN FOR EUROPE; OIL, TOBACCO, HOLIDAYS IN FOCUS (0657 GMT)

A bit of mixed bag here in Europe with France's CAC 40 futures firmly down 0.3%, while other major indices are trading flat to slightly lower, as investors are cautious in making risky bets amid recession fears and confusing messages from U.S. and China on trade talks. The U.S. Treasury yield curve inversion deepened, roiling Wall Street overnight.

"The weekend's G7 meeting failed to clarify the position (on trade), with President Trump even suggesting that his confusing approach to the negotiations is a deliberate strategy, which makes it no easier for external observers to predict," Peel Hunt Economics & Strategy Research Analyst Ian Williams (NYSE:WMB) says.

Meanwhile in Italy, stocks have rallied 2.5% in the last two days after the two parties trying to form a new government made progress toward a coalition deal. The country's President Sergio Mattarella ends consultations with both sides today.

Oil and mining stocks are expected to rise this morning supported by a rally in crude and iron ore prices overnight.

In corporate news, BP's plan to sell all its Alaskan properties in a deal worth $5.6 billion is making big headlines and dealers expect the British oil major's shares to rise 2%.

Talks for a potential massive merger between Philip Morris PM.N and Altria MO.N in the U.S. tobacco space last afternoon is expected to continue to hurt shares of UK's British American Tobacco BATS.L and Imperial Brands IMB.L , according to dealers.

Credit Suisse (SIX:CSGN) says "the market will see this slightly negatively for BAT and IMB as such a merger would create a more potent NGP (next generation products) competitor."

Adyen ADYEN.AS shares could get a boost from its partnership deal with Alipay, under which the Dutch payments company will support payments outside of Chinese mainland for AliExpress, Taobao, Tmall and Alibaba (NYSE:BABA).com.

A bit of a relief for Thomas Cook Group TCG.L as the struggling British package tour operator agreed the key commercial terms of a rescue package with Fosun Tourism, its banks and a majority of its bondholders.

Key headlines:

BP to quit Alaska after 60 years with $5.6 bln sale to Hilcorp awarded just $19 mln by tribunal in Colombia lawsuit Bank says records sought in Trump congressional probe include tax returns holiday firm Thomas Cook agrees key terms of rescue deal Baker seeks to propel growth in Japan with license partnership Smith travel unit shines, expects annual outcome to meet expectations Adinarayan)

*****

EUROPE SEEN OPENING SLIGHTLY LOWER (0545 GMT)

European stocks are set for a subdued open after yesterday's gains as the prolonged trade spat between the world's largest economies are denting corporate profits. On the other side of the pond, stocks slid overnight as a deepening of the Treasury yield curve inversion raised U.S. recession worries.

Recent financial data from Refinitiv suggested Europe Inc earnings are expected to suffer further declines during July-September period, the third straight quarterly decline. spreadbetters expect London's FTSE to open 8 points lower at 7,081, Frankfurt's DAX to open 17 points lower at 11,713, and Paris' CAC to open 14 points lower at 5,373.

"Yesterday's gains for European stocks always had the feel of a rally bereft of conviction, given that bond markets were still finding decent support, with yields still looking on the soft side, and precious metals continuing to push towards multi year highs," CMC Markets UK's Michael Hewson says.

Over the weekend, the world's top wealth manager UBS said it turned "underweight" on global equities citing the prolonged trade war between U.S. and China.

(Thyagaraju Adinarayan)

*****

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LIVE MARKETS-As UK's political crisis deepens, a glimmer of hope in Italy
 

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