* European shares rise 0.4%
* DAX hits record high
* Banks recover from Archegos hit
* Tech lags: Nasdaq futures down
March 30 - Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com
ECB'S PEPP TO KEEP UP PACE? (1127 GMT)
The European Central Bank will maintain its recently announced increased pace of asset purchases beyond Q2, Barclays (LON:BARC) analysts say, citing financial conditions indicator -- a measure closely tracked by investors to guess the central bank's move.
And that move could fully exhaust the PEPP envelope before March 2022 and will require an expansion of the ECB's QE programmes (APP and/or PEPP) no later than at the December 2021 ECB policy meeting, they argue.
Barclays says the financing condition indicator at the moment remains "sub-optimal, although accommodative" and that would prompt the ECB to err on the side of caution. Rebaudo)
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FTSE DIVIDEND TAP TURNED BACK ON (0933 GMT)
After last year's dividend carnage, UK blue chips kicked off 2021 on the right foot with consensus forecasts now showing that the FTSE 100 is set to deliver its first year of dividend growth since 2018, according to AJ Bell.
The FTSE .FTSE is set to deliver a £74.3 billion payout, enough to equate to a yield of 3.8%. That compares to a payout of £61.4 billion for last year, the lowest since 2013, AJ Bell data showed.
Rio Tinto (LON:RIO) and BHP Billiton (LON:BHPB) are expected to generate the biggest share of the total dividend increase this year.
Here is an estimate of top dividend payers in 2021:
2021 E
2021 E
Dividend
Dividend increase
increase (£
(% FTSE total)
million)
Rio Tinto
2,688
20.9% BHP Group
1,451
11.3% HSBC
1,046
8.1% NatWest Group
969
7.5% Anglo American (LON:AAL)
966
7.5% Barclays
763
5.9% BT
694
5.4% Lloyds (LON:LLOY)
659
5.1% Persimmon (LON:PSN)
398
3.1% Glencore (LON:GLEN)
386
3.0% Source: Company accounts, Marketscreener, consensus analysts' forecasts (compiled by AJ Bell)
Things are looking promising so far. In the first quarter of the year, 42 firms have declared or made a dividend payment and 12 more have returned to the dividend list.
FTSE 100 dividends
£ million
£ million
£ million
CUT
KEPT
RESTORED
2020
37,300
28,010
2,715
2021
2,766
19,814
5,027
TOTAL
40,066
47,824
7,742 Source: Company accounts (compiled by AJ Bell)
Additionally, Barclays, Berkeley Group, CRH (LON:CRH), Ferguson, Rightmove, Sage and Standard Chartered (LON:STAN) have announced share buybacks "to further top up cash returns to investors," says Russ Mould, investment director at AJ Bell.
"The worst may indeed be over for those investors who are seeking income from UK equities, although they will still want to see the vaccination programme beat off the virus and the global economy gather some real traction before they truly begin to relax," says Mould.
(Joice Alves)
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MORE VALUE AND CYCLICALS (0848 GMT)
Markets look less and less worried about rising bond yields, while they are figuring out how to make the most of the future economic scenario.
Berenberg sees U.S. bond yields at 2.5% at the end of 2021 and at above 3% in 2022 with the U.S. GDP 8% being higher than pre-crisis highs in 2022.
The best way to be protected against rising interest rates is to make sure that portfolios are not underweight cyclical and value sectors, Berenberg analysts say.
Tech stocks and defensives “have predominantly had negative correlations with U.S. 10-year yields since 2012.”
So it seems that the same old rules still work in a post-pandemic scenario.
Because let's face it, equities appreciate when the economy grows and fall during a recession, “unless inflation and interest rates rise dramatically.”
U.S. President Joe Biden will outline how he would pay for his $3 trillion to $4 trillion plan to tackle America's infrastructure needs on Wednesday. suggests staying exposed to commodities as the combination of recovering demand coupled with a weak U.S. dollar “should continue to support commodities prices.”
On the earnings front “U.S. and global EPS growth of around 25% cumulative is likely in 2021-22, with risks skewed to the upside.”
Pre-tax corporate margins, which are around post-1980 highs, should protect U.S. and European companies against rising cost pressures.
(Stefano Rebaudo)
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FINANCIALS ROAR BACK, DAX EYES 15K (0740 GMT)
It's clearly risk on at the open in Europe with financials powering broad-based gains and the DAX hitting a new record high, fast approaching the 15,000 mark for the first time ever.
It looks investors have been quick in buying the Archegos dip, sending banks into a complete reversal to lead sectoral gainers in the region, following Monday's pain.
The bank index .SX7P is up 2% at pixel time. Credit Suisse CSGN.S is stabilising, up more than 1% after the Archegos default dragged it down nearly 14% in its biggest drop in one year.
UBS UBSG.S , Deutsche Bank DBKGn.DE are up too, as concerns over the downfall of the U.S. hedge fund evaporate.
Tech .SX7P is a weak spot as the recovery narrative regains steam and yields hit new highs, just ahead of Biden's multi-trillion-dollar infrastructure bill.
Nasdaq futures meantime are down 0.6%.
(Danilo Masoni)
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LOOKING PAST ARCHEGOS (0704 GMT)
Risk-on sentiment is timidly reappearing. Hopes are that the Archegos fiasco will just spoil the quarterly numbers at a few big banks without inflicting any systemic global damage.
And with the policy backdrop supportive of a recovery from the Covid-19 downturn, bond yields have regained momentum, Germany's DAX equity index looks set for another new historic peak at the open, extending its record-breaking run.
And 10-year U.S. Treasury yields, back above 1.75%, have just set a 14-month high.
U.S. futures are subdued however. As President Joe Biden readies a multi-trillion dollar infrastructure plan, higher Treasury yields have taken the dollar to four-month highs, investors are booking profits off pricey tech stocks and looking for plays better geared to economic recovery.
On the Archegos front, pressure eased a tad off Nomura shares which on Monday endured a 16% drop, while in Europe, eyes are on Credit Suisse following a fall of nearly 14%. Both warned of major losses from lending to Archego for derivatives trades.
Investors will wait to see if the events could scupper a planned one billion Swiss franc ($1.08 billion) share buyback by Credit Suisse.
Elsewhere in corporate news, a deeply discounted cash call is set to hit tower company Cellnex.
Key developments that should provide more direction to markets on Tuesday: •
Japanese retail sales fell for the third straight month in February as households kept a lid on expenditure •
BOJ Governor offered a cautiously optimistic view of the economy, saying global and Japanese growth are picking up thanks to aggressive stimulus measures •
The Federal Reserve is "a long way from raising interest rates at this point," Fed Governor Christopher Waller said •
Britain's Royal Mail RMG.L to pay a one-off dividend for the year ending March: Imperial Brands (LON:IMB) maintained its full-year adjusted profit growth forecast •
German flying taxi startup Lilium to float on U.S. markets via a reverse merger with blank-cheque firm Qell Acquisition Corp, valuing the combined company at $3.3 billion •
Fed Deputy chair for supervision, Randall Quarles is to speak. •
Swedish National Bank Stefan Ingves Speaks 1500 GMT •
New York Fed President John Williams (NYSE:WMB) 1800 GMT. •
Emerging markets: Chile central bank meets •
German prelim CPI •
US consumer confidence
(Danilo Masoni)
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EUROPE SEEN ON THE UP (0629 GMT)
European shares are set to open up slightly this morning as worries over the Archegos default ease while the policy backdrop remains favourably supportive of a strong economic recovery.
Futures on the EuroSTOXX50 and FTSE indices are up 0.2-0.3% following a choppy session on Monday, while S&P 500 futures however were trading around parity but above Monday lows.
Over in Asia, shares were mixed, while rekindled concerns about inflation pushed bond yields higher. Masoni)
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https://tmsnrt.rs/3rxz0c4 DAX
https://tmsnrt.rs/3rDZUim commodities
https://tmsnrt.rs/3cz8b2P earnings
https://tmsnrt.rs/3cwWpWC FCI
https://tmsnrt.rs/31yfpxC
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