5 things to start your day

Five Things - Europe

Good morning. Trade deals are in focus, stocks are rising and there's financial services deal news. Here's what's moving markets.

Brexit Drags

Surprise, surprise, Brexit talks could drag on further amid a struggle to reach a trade deal. U.K. Environment Secretary George Eustice said it may be possible to "squeeze out extra time" beyond this week. With state aid and fishing remaining key sticking points, Chief Brexit negotiator David Frost said he's heading back to Brussels for more talks, and that the U.K. "will not be changing" its position. The big question for self-isolating Prime Minister Boris Johnson, meanwhile, is what to do now adviser Dominic Cummings is gone.


There's a new acronym to learn after Asia Pacific nations including China, Japan and South Korea signed the world's largest regional free-trade agreement, encompassing nearly a third of the global population and gross domestic product. Top officials from 15 nations sealed the Regional Comprehensive Economic Partnership, or "RCEP," after nearly a decade in the making. Benefits of the agreement include a tariff elimination of at least 92% on traded goods among participating countries.

More Gains

The trade news helped push Asian stocks toward a record close, while data showed China's economic recovery strengthened in October, with consumer spending picking up and industrial production rising faster than expected. U.S. and European futures were also buoyed by signs of opposition to a national American lockdown. The Stoxx Europe 600 index is already up about 13% this month amid a double boost from vaccine news and the U.S. election. Morgan Stanley strategists see a favorable environment for stocks and credit next year as volatility declines.

Nexi Nabs Nets

We start the week with some deal news after Italian payments processor Nexi SpA agreed to buy private equity-owned rival Nets A/S, a month after purchasing a state-backed competitor and creating one of Europe's biggest payment providers. The all-share deal values Copenhagen-based Nets at 7.8 billion euros ($9.2 billion), and adds to a wave of consolidation sweeping the continent's financial services industry. Elsewhere, PNC Financial Services Group Inc. agreed to acquire Banco Bilbao Vizcaya Argentaria SA's banking operations in the U.S. for $11.6 billion. 

Coming Up…

It's a quieter earnings week, with Vodafone the only heavy-hitter on our schedule today, so here's a re-cap of reporting season. Watch U.K. homebuilders, too, after Rightmove said asking prices for homes slipped in the latest monthly data reading. Elsewhere, in global politics, U.S. Secretary of State Michael Pompeo is on a potentially awkward 10-day overseas trip that includes stops in France, Turkey and Saudi Arabia.

What We've Been Reading

This is what's caught our eye over the weekend. 

And finally, here's what Cormac Mullen is interested in this morning

U.K. equity investors should pay closer attention to the direction of U.S. Treasury yields. That's if they are sympathetic to the view of Citigroup strategists who favor an "aggressive" bet on cheaper U.K. stocks over their more expensive American counterparts should 10-year yields climb toward 1.25%. A team at the U.S. banking giant has proposed a short-term strategy into 2021 on the expectation that a Treasuries selloff will drive a further rotation to value from growth stocks, which would benefit a U.K. market full of financials, materials, industrials and energy stocks. Citi sees U.S. yields rising as markets look through bad fundamentals toward an economic recovery next year. The U.K.'s FTSE 100 Index has surged 13% this month as investors rotated into laggards on optimism over progress toward a coronavirus vaccine. It remains down 16% for the year. The S&P 500 Index is up about 10% this month and closed at an all-time high on Friday. Citi expects the Treasuries sell-off to stop when benchmark yields hit 1.25%, making the rotation call a short-term one only. Still, even a push toward 1% is proving a challenge for the global bond benchmark. The 10-year Treasury yield traded at 0.88% Monday as bond traders mulled the potential for tighter social-distancing measures to cloud the economic recovery amid a resurgence in coronavirus cases in many parts of the world.

Cormac Mullen is a Cross-Asset reporter and editor for Bloomberg News in Tokyo. 

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