- STOXX climbs for the second record in a row
- London catches up after the holiday
- Travel and leisure stocks shine
- Future rise of Wall Street
January 4th – Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at [email protected]
UK REAL ESTATE SHARES JUMPING TO 2015 LEVELS (1230 GMT)
Real estate stocks listed in London rose to multi-year highs as Omicron’s impact on the industry was expected to be less than initially feared.
Register now for FREE unlimited access to Reuters.com
London FTSE 350 real estate company (.FTUB3510) hit its highest level since October 2015, with housewife Hammerson’s shares rising 5%.
Here are the top performers in the sectors:
Not even data from the Bank of England showing UK mortgage approvals in November were their lowest since June 2020 spoiled the party.
The BoE said mortgage loans were up Â£ 3.693 billion net, from falling to Â£ 1.149 billion in October after a stamp tax break expired in late September.
However, the November surge was nearly Â£ 3 billion below the average in the 12 months to June when the tax break was in full effect, the BoE said, suggesting a cooling demand in the housing market. Continue reading
OMICRONS MATER FOR FEAR AND GREED (1218 GMT)
The European Travel & Leisure Index is showing no signs of slowing down and even gradually accelerated to a 3.5% gain during morning trading, which would be the fourth-best performance in the last 12 months.
Obviously, that says a lot about how investors feel about Omicron right now and how big the threat is to the further development of the economy.
“The profits for oil companies, airlines, and hotel, pub and restaurant operators reflect reduced investor concerns about the Omicron variant of Covid-19 in the hope that it will be milder, if more transferable,” the investment director concluded AJ Bell, Russ Mold, together.
Hargreaves Lansdown analyst Susannah Streeter also suggested that there may be a lot of catching up to do.
“With so many people being forced to isolate themselves at home on a short-term basis, many people will likely spend the next few weeks browsing travel blogs for inspiration as there is so much desperation after a vacation,” she added, noting others Stocks like movie theater operators also rose.
But there is one more indicator that investors look at to gauge the waves of fear and greed created by the new variant and that is the yen, which has fallen to a five-year low against the dollar.
At 116.14 per dollar, a level not seen since January 2017, the safe-haven currency seems like a good market indicator that the markets are not afraid of Omicron right now.
The rally in bond yields that comes with risk-on moves is indeed being clearly felt in the Japanese currency.
“The dollar / yen subsequently hit a new five-year high as traders reduced their exposure to port facilities and widened interest rate differentials against the yen, thanks to the Bank of Japan’s strategy of capping Japanese yields,” wrote XM analyst Marios Hadjikyriakos.
(Julien Ponthus and Elizabeth Howcroft)
NEW DAY, NEW MILESTONES (0950 GMT)
With the STOXX 600 hitting an all-time high yesterday, it is hardly surprising that a second day of price gains across Europe brings with it new milestones.
After all, the pan-European index reached a new record with 493.64 points:
The same applies to France’s CAC 40, which with 7288 points is also a new high for another session:
Other sectors also set new records such as Industry with 811 points, Personal & Household Goods with 1,118 points, Construction & Materials with 652 points and Food & Beverages with 883 points.
But while continental stocks continue to rise, it’s worth noting that the London-based FTSE 100, which today is up 1.2%, is still over 5% off its May 2018 record:
OF BLACK AND GRAY SWANS (0909 GMT)
Troubled stocks, a very restrictive US Federal Reserve and soaring gold prices are some of the surprises markets should focus on in 2022, according to Byron Wien, vice chairman and Joe Zidle, chief investment strategist of the Private Wealth Solutions Group at private equity giant Blackstone .
He defines a “surprise” as an event where the average investor assigns only one of three chances, but thinks Blackstone’s wine is “likely” or has a probability of greater than 50%, and lists 10 surprises that the Markets offering would do well to focus on this year.
Some of the other notable ones are that inflationary pressures are tightening, nuclear alternatives to power generation are entering the arena, and ESG initiatives are becoming more widespread, with government agencies enforcing new regulatory standards on the subject. A full list can be found at: https://www.blackstone.com/news/press/byron-wien-and-joe-zidle-announce-the-ten-surprises-of-2022/
LONDON STARTS TRAVEL AND LEISURE (0832 GMT)
The UK’s travel and leisure stocks shine this morning and are the undisputed front-runners in the pan-European STOXX 600.
BA owners IAG, Ryanair, Wizz Air and TUI are up between 6% and 8.5%, pulling the sector up to 2.7% in early trading.
There is definitely some optimism in the air that Omicron will not pose a long-term threat to economic recovery.
London, closed for a bank holiday yesterday, caught up with the overnight rally and the FTSE 100 rose 1.1%, about twice as fast as the STOXX 600 ‘0.5%.
The optimism for the new year is well spread across all industries. Energy, miners, banks, automobiles, and retail all rose over 1%.
This is how the travel and leisure industry is doing this morning:
(Julien Ponthus with Tommy Lund)
PARTY LIKE 2022 (0756 GMT)
While many New Year’s Eve celebrations around the world were downsized or canceled due to the rise in the Omicron coronavirus variant, the financial markets held their own party on the first trading day of 2022.
The pan-European STOXX 600 hit a new record high on Monday and the S&P 500 (.SPX) and Dow Jones (.DJI) closed at historic highs on Wall Street.
The euphoria surrounding the shares was best captured by Apple (AAPL.O), which reached a market capitalization of $ 3 trillion, which is well above the combined value of all blue chips listed, for example, on the London FTSE 100 (.FTSE).
US Treasury bond yields also rose as optimism about the economic recovery led some investors to prepare for earlier-than-expected rate hikes by the Federal Reserve.
US 2-year bond yields, sensitive to rate hike expectations, rose to their highest level since March 2020 when the pandemic sparked market turmoil. Continue reading
Other asset classes also enjoyed risk appetite, such as oil, which rose in the hope of further demand even though OPEC + should agree to further increase production. Continue reading
Simply put, there is an optimistic consensus that the unprecedented wave of COVID-19 infections will not wipe out the global recovery and that vaccines will prevent the need for tough lockdowns.
Of course, this narrative can be seen as a leap of faith in the supposedly milder nature of Omicron and that other factors like inflation, a political mistake, or politics won’t suddenly shake the boat.
Meanwhile, Asian stocks were bullish on Tuesday and European and US stock futures pointed to another session of gains.
China Evergrande’s shares rose up to 10% on resumption of trading after the developer said a government order to demolish 39 buildings on the resort island of Hainan would not affect the rest of its project there. Continue reading
And data showing that China’s factory activity grew the fastest in six months in December and German sales rose unexpectedly in November could fuel further optimism.
Key developments that should give the markets more direction on Tuesday:
– German retail sales recover in November
–Switzerland, France CPI data
– UK mortgage data
Read more – Oil prices rise ahead of OPEC + production policy meeting
LONDON READY TO COLLAPSE (0747 GMT)
The London Stock Exchange had a bank holiday yesterday so missed the New Years party in global markets.
It looks like Fomo has built up strongly and investors are poised to catch up.
Futures for the FTSE 100 are currently up over 1%.
However, other European exchanges are expected to generate profits for the second year in a row, but the increase is limited to around 0.5%.
Same trend for US futures, which are currently pointing to a different daily or record high on Wall Street.
Register now for FREE unlimited access to Reuters.com
Our Standards: The Thomson Reuters Trust Principles.