- STOXX 600 down 0.4%
- Concerns over impact of sanctions weigh
- Commodity stocks rally
- U.S. stock futures ease
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MINERS DO THE HEAVY LIFTING (1230)
Miners are doing some heavy lifting in Europe today, with all other sectors in the red apart from basic resources (.SXPP) which is up 2.6%.
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While other sectors suffer amid volatility and geopolitical tensions, miners are supported by soaring commodity prices, as Russia's invasion of Ukraine disrupts supply chains.
London-listed Glencore and Anglo American are up 6% and 4% respectively while Sweden-based high-tech metal company Boliden is 3.3% higher.
The European composite index is down 0.6%, with utilities weighing it down the most with a 2% drop. Autos is next, falling 1.8%.
NOT ALL VALUE SECTORS ARE CREATED EQUAL (1130 GMT)
Autos and banks may underperform other value stocks like healthcare in the current environment, according to BNP strategists.
With the market pricing of 2022 ECB rate hikes dropping to under 20bp from 50bp in the last fortnight and increasing geopolitical tensions, they take a more selective view on value sectors, with defensiveness and quality in focus.
"We see a cautious stance from central banks as the key risk for European banks. In addition, given continued negative real wage growth in the medium term, we expect late-cycle concerns to weigh on European car makers," they say.
Healthcare names are their value stock of choice, with large cap European pharma names trading at a high discount to their U.S. counterparts despite strong earnings outlooks.
Cutting its year-end target for the Euro STOXX 50 (.STOXX50E) by 7% to 4,200 due to escalating geopolitical tensions, the strategists advise against buying the current dip amid slower growth, inflation and policy tightening risks.
EUROPE STRUGGLES FOR DIRECTION(0923 GMT)
After opening virtually flat, European stocks are struggling to find direction this morning as investors take shelter against a tumultuous geopolitical backdrop. The .STOXX 600 was trading a fraction higher earlier but is now 0.12% in the red.
Sector performance is a mixed bag, with basic resources (.SXPP) companies at the top of the list gaining 3.2%. Banks and oil and gas companies are up 1.2% and 1.1% respectively.
Meanwhile utilities are down 1.7%.
The volatility meter for euro zone equities .V2TX is off its March 1 high but remains elevated at 38 points, down 2.2% this morning.
IT GETS REAL (0809 GMT)
Minutes from the European Central Bank's February meeting are due later on Thursday but last month's shock hawkish pivot seems like distant history now.
With Brent crude up some $30 a barrel since mid-February and European gas prices more than doubling in this period, the ECB will be looking with alarm at spiralling inflation expectations; Ten-year German 'breakevens', which reflect future inflation, have jumped 40 basis points since that February ECB meeting .
Shorter-dated breakevens are above 4%.
And while estimates vary widely of how the war will impact euro zone GDP, a growth hit is certain and that's dampening the likelihood of near-term policy tightening.
With markets paring expectations of an ECB rate rise this year, swathes of the regional bond market are back into negative-yield territory. Moves are more pronounced in "real" yields - borrowing costs after stripping out inflation -- German 10-year real yields are at record lows below -2%.
U.S. Treasury real yields recovered a touch on Wednesday after Federal Reserve Chairman Jerome Powell clearly signalled a quarter-point rate rise was on the cards at the Fed's March 15-16 meeting. (Though ten-year real yields around -0.9% are still half where they were earlier this month).
Stock markets are reflecting this transatlantic divide, and Citi advise clients to add exposure to U.S. stocks, in particular the tech sector which benefits from falling real yields. But they also remain positive on commodity-heavy UK stocks.
European stocks are opening weaker, despite a strong Wall Street close following Powell's clear signal that a 50 bps rate rise is unlikely.
The bad news continues to pour in on the Russia front. Societe Generale acknowledged an 18.6 billion-euro exposure to the country. It's further bad news for European banking stocks, already down more than 20% since mid-February read more .
Key developments that should provide more direction to markets on Thursday:
-Japan's service sector activity contracts at fastest pace in 21 months read more
-China's Feb services activity expands at slowest rate in six months read more
-Euro zone PPI/unemployment rate
-Emerging market central banks: Malaysia, Ukraine
-European earnings: Taylor Wimpey, Lufthansa, Thales, LSEG, ITV, Admiral, Fortum, Raiffeisen, Merck
-U.S. earnings: Best Buy, Kroger, Costco, Gap, Marvell
EUROPE SET TO STEADY (0724 GMT)
Following a close on Wednesday near the session's highs in another day of highly volatile conditions, European shares look set to steady as investors closely watch developments in Ukraine after reports that a Ukrainian delegation has departed for a second round of talks with Russia. read more
EuroSTOXX 50 futures were flat following gains in Asia and a strong close on Wall Street after Fed Chair Powell signalled the central bank would likely raise rates less than some investors had feared, even as oil prices continue to rally.
U.S. equity derivatives were also little changed.
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