EMEA Morning Briefing : Markets Kick Off Data-Packed Week

MARKET WRAPS

Watch For:

No major economic updates expected; trading updates for Continental, Cellnex Telecom, Hannover Re, Vodacom, Direct Line Insurance.

Opening Call:

European stock futures pointed to a higher open, after Asia stocks were mixed. The dollar strengthened while gold and oil prices fell.

Equities:

European stocks were set for a higher open, after Asian stocks traded mixed following a blockbuster election week for U.S. stocks.

Markets will focus on a number of economic data releases in the week, including U.S. inflation data and retail sales, Germany's ZEW economic sentiment indicator and minutes from ECB's most recent meeting.

While some investors worry that stocks are already trading at relatively high multiples of companies' earnings compared with recent history, others see further room to climb.

"With strong fundamentals and cash sitting on the sidelines, this new administration should give a pretty good kicker to multiple expansions in what's already a strong bull market," said Paul Feinstein, chief executive of Audent Capital Partners.

Forex:

Volatility in the foreign-exchange markets is on the rise as investors try to decipher the implications of Trump's U.S. presidential election win, Westpac said.

The new Trump administration's policies could prove positive for the U.S. dollar, the bank noted.

However, Trump's inauguration isn't until Jan. 20, and there could be many "interim gyrations" even though themes related to the policies will probably re-emerge, Westpac added.

Bonds:

After the postelection spike in Treasury yields, analysts expect the bond market to continue rising with a Trump victory and the Republican party winning control of the Senate.

"My guess is that rates in the bond market will keep rising and get to a level that the equity market doesn't like," Penn Mutual Asset Management's president and chief investment office Mark Heppenstall said, adding that he sees risks growing that could push the 10-year yield above 5%, a level which was briefly crossed in October 2023.

Given expectations that Republicans may not do much to rein in the national deficit, which is currently at $1.83 trillion, "the bond market could push back and force some kind of fiscal discipline," Heppenstall said.

"We could see a case where the Fed has to stop cutting rates a lot sooner than the market was thinking, if tax-cut policies and other fiscal stimulus play out," he added.

Energy:

Oil fell as markets remained concerned about the effects of Trump's promised tariffs on China's economic growth, as it may crimp oil demand, ANZ Research said.

Trump returning as U.S. president could also raise more U.S. oil production, although "this remains a long-term story and depends on the economics of oil drilling," ANZ added.

Metals:

Gold prices were lower as traders continued to digest recent U.S. dollar strength and the uptrend in Treasury yields in the wake of Trump's election win.

Saxo Bank said it sees no reason to change its bullish stance on precious metals.

"At worst, we view the correction this past week as a healthy response to weeks of election-focused buying," Saxo said.

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Iron ore prices fell after China's fiscal stimulus fell short of expectations after authorities announced a 6 trillion yuan package to be issued over three years to address local government debt.

"The meeting outcome was likely a disappointment to offshore investors," especially for commodities that are sensitive to China policies, CreditSights said.

However, "it is too early to rule out a big stimulus in 2025 given the high likelihood of additional U.S. tariffs and prolonged weaknesses in the property sector and domestic consumption," CreditSights added.

TODAY'S TOP HEADLINES

If Trump Tries to Fire Powell, Fed Chair Is Ready for a Legal Fight

When a frustrated Donald Trump flirted with removing Federal Reserve Chair Jerome Powell in a dispute over interest rates back in 2018, Fed leaders privately readied a break-glass-in-case-of-emergency response: a legal challenge against the president to protect the integrity of America's central bank.

Powell told then-Treasury Secretary Steven Mnuchin that he would fight his removal if sought by the president, according to people familiar with the matter. Trump was upset the Fed was raising interest rates against his wishes.

The Crypto World Is Preparing for a Renaissance Under Trump

Bernie Moreno was celebrating Tuesday night at La Centre, a banquet center in the Cleveland suburbs, when he got a call from Brian Armstrong, Brad Garlinghouse and a handful of other crypto executives.

The Republican had just defeated three-term Sen. Sherrod Brown, the head of the Senate Banking Committee and one of the largest crypto critics on Capitol Hill. The executives wanted to congratulate Moreno.

Calls for 'Jew Hunt' Preceded Attacks in Amsterdam

AMSTERDAM-Israeli financial adviser Ofek Ziv had just emerged from the metro, heading to the Dutch capital's central Dam Square with a group of Maccabi Tel Aviv soccer fans, when he says he was struck in the back of the head with a rock. A firecracker exploded near him. Men in ski masks later appeared, wielding knives and bats.

The assailants, he said, "had fire in their eyes. They want to catch you."

Bill Ackman Seeks to Scrap Pershing Square, Universal Music Listings in Amsterdam After Attacks

Hedge-fund billionaire Bill Ackman said he wanted to terminate the Amsterdam listings of Pershing Square Holdings and Universal Music Group after violence in the Dutch capital that authorities called antisemitic attacks.

Ackman wrote on X that he would seek approval from the board of Pershing Square Holdings-in which he said he and his family own a 23% stake-to remove its listing from the Euronext Amsterdam and keep the investment holding company on the London Stock Exchange.

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

11-11-24 0015ET