Europe midday: Stocks slightly lower ahead of Draghi speech


Europe midday: Stocks slightly lower ahead of Draghi speech

Thu, 12 October 2017
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(ShareCast News) - European stocks are seeing slight losses on the back of a dip in shares of Wall Street heavyweight JP Morgan following its latest third quarter numbers and ahead of a speech from European Central Bank chief Mario Draghi.
That came amid a heightened focus in markets on whether stocks were rising too far and too fast and to what extent central banks should take that into account.

As an aside, but not wholly unrelated perhaps, Bitcoin prices were hitting fresh record highs in early trading.

Against that backcloth, as of 1216 BST the benchmark Stoxx 600 was 0.14% or 0.53 points lower to 389.58, while the German Dax was slipping 0.09% or 12.05 points to 12,958.64.

In all things Spain, the clock was ticking as markets waited on Catalan president Carles Puigdemont's response to a petition from Madrid for greater clarity on his plans and the stance of the regional government.

Commenting on the situation in markets, David Madden, market analyst at CMC Markets UK, said: "The ball in now in the separatists' court, and given the update from the Catalan President, Carles Puigdemont on Monday, it doesn't appear that he is too keen to unilaterally declare independence.

"Mr Puigdemont risks having direct rule being imposed from Madrid, but then again, he may secretly desire that in order to stoke nationalist tensions. The IBEX 35, along with other major European indices is slightly lower on the day."

Related to the above, analysts at Deutsche Bank raised their recommendation on Spanish stocks from an 'underweight' to an 'overweight' as - in their opinion - the tail risks of a break-up of the country had faded.

Following 6% underperformance for Spanish shares as a group since early August, mostly on the back of Catalonia independence jitters, they said that "pricing looks attractive".

On the other side of the equation, overnight the minutes of the US central bank's last policy meeting indicated that "many participants" had shown concern that low inflation readings might not only reflect transitory factors.

Euro area industrial production data for August jumped by 1.4% month-on-month in August (consensus: 0.5%), yet the main reference for markets will be Draghi's speech at 15:15 BST.

Later in the day, investors would be watching out for a speech from Federal Reserve governor Jerome Powell at 15:30 BST, alongside weekly initial jobless claims data at 1330 BST.

Meanwhile, in corporate news, Germany's Innogy purchased Statkraft's 50% stake in an offshore UK wind project.

French airport operator ADP on Wednesday announced a 4.7% rise in passenger traffic for September versus a year ago to reach 9.0m.