LIVE MARKETS-Luxury goods: so hot!

路透社 · 6 月 1 日 20:22

European shares hit fresh record high

  • European shares hit fresh record high

  • Basic materials stocks lead gains, up 3%

  • U.S. stock futures point to positive start

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LUXURY GOODS: SO HOT! (1221 GMT)

That luxury goods (and stocks) are expensive is a given.

What’s perhaps less known is that the space has far less to fear from this new inflationary environment compared to tech.

And that can help explain why investors searching for stocks with strong pricing power have been piling into names like LVMH or Kering, putting them on a record-breaking this month run and further inflating their valuation multiples.

In the past decade the MSCI Europe textiles apparel and luxury goods (.dMIEU0TA00PUS) index has commanded an average PE premium of 6.8% to the Nasdaq (.NDX) , which surely isn’t cheap.

Well now that premium has reached 24%, a 9-year peak, and it seems investors remain bullish on the sector, while tech is facing headwinds stemming from regulation and inflation.

“Results for the first quarter of 2021 show encouraging signs for the industry, thanks in large part to the exceptional recovery in the U.S. market,” said Giacomo Calef at Swiss-based asset manager Notz Stucki.

“In addition, significant growth is also expected in the years ahead. We have two major drivers. On the one hand, there is China and on the other we have digital, a trend that has seen a major acceleration during the pandemic,” he added.

Check out this chart.

(Danilo Masoni)


WHAT WILL THE DAX LOOK LIKE WHEN IT TURNS 40? (1024 GMT)

September is going to be a busy month for investors in German stock market. Besides the general elections they will also have to deal with a major reorganisation of the DAX 30

(.GDAXI) .

First of all the index will add ten new members to its ranks currently of 30 constituents and that, says UBS, could lift the index’s exposure to industrials and healthcare while eroding the weighting of consumer discretionary and materials.

Currently the Swiss bank sees Airbus (AIRG.DE) , Zalando

(ZALG.DE) , Symrise (SY1G.DE) , Porsche (PSHG_p.DE) , Hellofresh

(HFGG.DE) , Brenntag (BNRGn.DE) , Siemens Healthineers (SHLG.DE) , Sartorius (SATG.DE) , Beiersdorf (BEIG.DE) and Qiagen (QIA.DE) as candidates for potential inclusion.

As a result their entrance would change sector weightings in the brand new DAX 40 index. Here below is a pro-forma view.

(Danilo Masoni)


STILL POSITIVE ON CORPORATE BONDS (0944 GMT)

Corporate bonds have been doing better than government bonds, which recently came under selling pressure on rising inflation fears. The question is what is going to happen next.

“We remain convinced that those strong technicals and fundamentals will continue to remain supportive into year-end and expect further 10bp tightening for IG and 25bp for HY, and continue to favour BBBs, BBs, corporate hybrids and AT1s,” says Elisa Belgacem, analyst at Generali Investment.

Here are the factors which supported corporate bonds and are supposed to stay in place for the near future, according to Generali Investment.

  • real rates are the ones that matter for risk sentiment and will continue to be very low

  • fundamentals of corporate bond issuers continue to improve at a rapid rate, along with the economy

  • ECB focus on financing conditions keeps credit spread volatility low

  • the positioning “should remain resilient while not being exuberant.”

(Stefano Rebudo)


BANKS RALLY: MORE TO COME? (0828 GMT)

European banks are poised for more gains this year as positive yield environment and steeper yield curve could help their shares rise further, analysts say.

“The industry has improved over the past years with Deutsche Bank being put forth as an example of Europe’s banking industry coming out of a long hibernation,” Peter Garnry, head of European equity strategy at Saxo Bank said in a note last week.

Eurozone banks (.SX7E) have soared 75% since November 2020, when the first Covid-19 vaccine was announced. Germany’s benchmark 10-year Bund yield is at -0.17%, a touch away from hitting 0% for the first time in two years.

“Helping the trend is the rising interest rates which directly lift valuations of financials that benefit from steeper yield curves and return on their loan books,” Garnry added.

He expects European banks to rise a further 21%-36% over the next 6-12 months.

(Thyagaraju Adinarayan)


MINERS, AUTOS BOOST STOXX 600 (0747 GMT)

European carmakers and miners boost European equities after yesterday’s dip in a low-volume environment with the U.S. and the UK markets closed for holidays.

The Stoxx 600 index is up 0.6%, with basic materials stocks index (.SXPP) leading gains +2.7%, on expectations of rising global inflation; autos stock index (.SXAP) +2.1%.

Daimler (DAIGn.DE) shares are up 2.6% after the company ended its patent dispute with Nokia, stocks in Volkswagen

(VOWG_p.DE) rise 3.3% with traders looking at a possible IPO of its battery joint venture.

Risk sentiment remains somewhat subdued on inflation uncertainties, with investors focusing on upcoming U.S. employment data after last week’s substantial inflation numbers.

Shares in Raiffeisen Bank International (RBIV.VI) are among the best performers of the Stoxx 600 after JP Morgan raised to overweight from neutral.

(Stefano Rebaudo)


PBOC STRIKES BACK. YUAN SHRUGS (0712 GMT)

China’s central bank, the PBOC, struck a blow against the yuan’s run to three-year highs by hiking banks’ reserve ratios for the first time since 2007. The move, seen withdrawing just $20 billion worth of liquidity from the system, didn’t have much impact but might keep traders wary of pushing the currency higher for now.

Also on the central banking front, the Reserve Bank of Australia reiterated its mantra of no rate hikes until at least 2024 but more interestingly, tweaked its language, appearing to signal reduced asset purchases once the current QE programme ends.

The Aussie dollar rose as much as 0.5% at one stage, yet the main tailwind for non-U.S. currencies is the dollar index which is near recent 4-12 month lows.

Conviction the Fed will look through the current string of robust data has checked the greenback and Treasury yields, boosting rivals. Sterling in contrast is at three-year highs following a hawkish policymaker message last week.

Now for inflation. German May price growth at an annual 2.5%, a decade high could be followed by a 2%-plus print for the euro zone though ECB policymakers, like their Fed counterparts, are keen to stress the upsurge stems from one-off factors, notably energy.

Yet, there are signs of sticky supply-side issues. South Korean exports, a sort of global trade bellwether, rose 45.6% year-on-year in May, a 33-year high, but soaring input costs were notable.

Standard Chartered reckons markets underestimate Chinese factory inflation; it almost doubled 2021 forecasts to 6.8%.

We might get a hint on how oil prices might behave as an OPEC+ meeting kicks off. The group decided in April to add 2.1 million barrels per day of supply from May to July and is expected to stay the course. Brent crude meanwhile topped $70 a barrel.

Key developments that should provide more direction to markets on Tuesday:

-Chinese factory activity expanded at its fastest this year in May

-Private-equity firms KKR & Co and Clayton Dubilier & Rice LLC (CD&R) are near deal to take Cloudera Inc private at valuation of $4.7 billion

-German retail sales/jobless

-Final PMIs

-Euro zone flash HICP

-UK Nationwide house sales

-Bank of England Governor Andrew Bailey speaks at 1500 GMT

-Auctions: UK 10 and 25-yr gilts; Germany 5-yr notes

-OPEC and non-OPEC ministerial meeting

-U.S. earnings: Hewlett packard

(Sujata Rao)


EUROPEAN FUTURES IN THE BLACK (0528 GMT)

European stock futures are in positive territory after yesterday’s fall while their U.S. peers are flat as uncertainty about inflation and a Fed tapering keeps markets on edge.

Equities continue to be hooked to economic data, with some analysts arguing that the markets are unlikely to know better how temporary inflation will really be until late summer.

The focus is on U.S. payrolls due on Friday as another big miss on the jobs front would probably delay prospects of a wind-down of the Fed stimulus, despite last week’s stronger than expected data on U.S. inflation.

(Stefano Rebaudo)


Call on OPEC+ crude vs. production

snapshot

Eurozone banks

credit

DAX 30 vs 40

luxury

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