European Equity Market Handover: Italy Déjà vu times two

Tuesday’s optimistic bounce fades as prospects of a U.S.-China resolution recede

Stock market snapshot as of [15/5/2019 1:43 PM

  • As prospects that the preeminent headwind against risk-taking—chiefly the rekindled U.S.-China trade dispute—might recede, stock markets fade Tuesday’s optimistic bounce
  • Additionally, as Italy’s coalition government approaches half-way through a typical term, existing fractures are widening and bond market volatility resuming
  • Deputy Prime Minister Matteo Salvini’s suggestion that Italy might purposefully flout EU fiscal prescriptions has swiftly triggered Italy’s key economic fault line of debt and their conduit to the stock market, under-capitalised and over-exposed banks
  • Two-fisted aversion has thereby capped European indices all session
  • Oil shares lose their early-week advantage after Tuesday’s American Petroleum Institute data showing inventories building; energy market participants are focusing more strongly on the EIA update that will be out shortly
  • The dollar shows signs of resilience despite weak U.S. Retail Sales and disappointing Industrial Output. The greenback sees inverse help from a soft Canadian inflation print; also from a much better than expected read of the New York Fed’s economic region, where the output index hit 17.8% this month against 8 expected

Corporate News

  • Kingfisher brought the standout set of corporate figures and they weren’t inspiring. Europe’s top DIY retailer failed to outpace ‘easy’ comparable sales from last year’s first quarter, sealing the likely fate of CEO Veronique Laury, who investors expect to step down this year
  • Parts of the U.S. retail sector may contrast sharply with Europe, if Macy’s is a good indicator. The store operator’s Q1 comparable sales growth was more than double the 0.3% expected. Adjusted earnings were well above Wall Street views. The stock trades firmly in a falling S&P 500 index.  
  • NVIDIA will close out the Big tech earnings season tonight and expectations are low, with adjusted Q4 EPS seen slumping about 50%

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