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European stocks tumble on recession concerns, while investors switch off ITV

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After the slide in US markets yesterday on the back of the Brainard and Daly balance sheet and tightening comments, the tone for markets has soured significantly European stocks sinking sharply as the mood music over more onerous sanctions on Russia ratchets up further in anticipation of that we could well see evidence of further Russian atrocities in the coming days.

Europe

While the mood music around energy embargoes on Russian oil and gas still retains a degree of reluctance on the part of the European countries holding out, the direction of travel suggests that it’s only a matter of time before the pressure becomes too much and the hold outs like Germany have to bow to the inevitable lest be accused of condoning genocide.

All markets in Europe have fallen sharply with the DAX falling to its lowest levels since 14th March, and the CAC40 getting hit on the back of Le Pen closing the gap on Macron in the French polls. 

Imperial Brands is one of the better performers today after reporting H1 operating profit slightly ahead of last year on a constant currency basis. The tobacco and e-cigarette company said its full year outlook remained in line with the updated guidance from last month.   

On the other side of the ledger ITV shares are lower on reports that the broadcaster might be interested in making a bid for Channel 4. It’s certainly an interesting proposition, assuming they can get it past the regulator as far as the advertising side of the business is concerned.

Notwithstanding that, and last month’s big 30% share price fall after the broadcaster announced it would be putting £180m of additional investment in a new streaming service ITVX, on top of their existing offerings of ITV Hub+, as well as BritBox, investors seem less than enthused by this latest move.

While some have suggested that the acquisition of Channel 4 could be a net positive for ITV it doesn’t change the story when it comes to its disjointed approach on its streaming services. For a start they need to decide on a specific model, this ad-hoc chopping and changing speaks to a management who can’t make up their mind about what type of streaming model they want to pursue. If they can arrive at a settled approach, it might give investors more confidence that they can achieve their target of digital revenues of at least £750m by 2026.

We’re also seeing big losses in consumer discretionary with the likes of Next, Marks and Spencer, JD Sports sporting significant declines, as investors worry about margin pinch and slower sales.

Airlines are also seeing big losses as rising Covid cases prompt large scale cancellations and disruptions to holiday schedules as we head towards Easter, with IAG and easyJet lower.

US

US markets have continued where they left off yesterday, opening lower with bond markets also sliding and US 10-year yields rising above 2.6%, while the US 2-year yield has lagged albeit it is now above 2.5% and a new 3 year high.

Today’s declines have been broad based with the more highly valued tech sector leading the declines, with the Nasdaq 100 sliding below last week’s low point.

Rivian shares are higher after the company reaffirmed its guidance that it would deliver 25k cars in this current fiscal year.

Tilray shares have surged after reporting an unexpected profit of 9c a share in its Q3 numbers, while also signing a deal with supermarket chain Whole Foods, while will sell the company’s Hemp powders. 

FX

The US dollar has continued to find support ahead of the release of the latest FOMC minutes which are due later today, and where we could well get some extra detail on how the US central bank intends on winding back its asset purchase program.   

Commodities

Brent crude oil prices have continued to look pressured after yesterday’s declines in the wake of the Shanghai lockdown in China. Today’s announcement from US allies that they would be adding another 60m barrels a day to last week’s 120m barrels a day release by the US has seen prices give up their early day gains to trade slightly lower on the day.

Volatility

Shares in CSPC Pharmaceutical have been in focus over the last couple of days after the Hong Kong listed company saw approval of its COVID-19 vaccine by the Chinese government. Gains were seen at the start of the week and although these haven’t been sustained, the real-world efficacy of this drug is likely to be closely followed given the country’s struggle so far get beyond the pandemic.

In terms of fiat currencies, it’s the Aussie Dollar that is the stands out, with technical gains being seen in the wake of yesterday’s statement from the Reserve Bank. Despite keeping rates on hold, for now, to help with the cost-of-living crisis, a clear signal was given to the markets that they should expect a hike in a couple of months. This served to extend the four-month rally for AUD/NZD, lifting daily vol to 10.94% against 7.11% on the month.

Over with commodities, OJ futures are once again seeing elevated levels of price action, although the run higher from late last week does seem to have lost some momentum. Regardless there’s concern over crop forecasts and that’s likely to keep this actively traded for some time yet. Daily vol rose to 121% against 100% on the month.

As for cryptos, Dogecoin is again top of the board as the coin gave back some of those arguably irrational gains off the back of Elon Musk’s investment in Twitter. The trade remains up on the week, but daily vol on Tuesday sat at 144% compared to 78% for the month.


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