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LIVE MARKETS-STOXX 600: post-corona earnings bonanza

LIVE MARKETS-STOXX 600: post-corona earnings bonanza

· 03/16/2021 09:21
LIVE MARKETS-STOXX 600: post-corona earnings bonanza

Nasdaq 100 futures rise modestly; Dow, S&P 500 futures ~flat

U.S. Feb retail sales MM -3% vs -0.5% estimate

Euro STOXX 600 up ~0.7%

Dollar ~flat; gold edges up, crude down

U.S. 10-Year Treasury yield ~1.59%

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STOXX 600: POST-CORONA EARNINGS BONANZA (0910 EDT/1310 GMT)

The consensus for earnings growth is already quite bullish when it comes to European equities: about 33% for the MSCI Europe index according to Refinitiv IBES data:

But there are analysts out there who believe it could be much better than that.

The UBS strategy team for European equities now expects European corporate earnings to rise by 50% in 2021, on the back of higher global GDP growth boosted by the $1.9 trillion U.S. stimulus package.

Almost two-thirds of 2021 EPS growth in Europe will come from just five sectors, the bank said: energy, autos, capital goods, banks and mining.

This comes after a thorough pandemic-driven drubbing to earnings in 2020, which are expected to have fallen by around 29%.

The third and fourth quarters of 2020 did already see improving sentiment, as companies recovered from the initial shock of the pandemic, and fiscal stimulus released earlier in the year began to take effect.

Other tailwinds such as COVID-19 vaccine rollouts and the Brexit trade deal also bolstered the UBS' outlook, and it flagged a 470 level year-end target for the pan-European STOXX 600 index .STOXX, representing a 17.8% jump from the index's 2020 close.

The improving earnings outlook is also reflected in share prices, with the STOXX 600 trading about 6.5% higher so far this year. The pace of the index's recovery has also surpassed its U.S. peers, with the latter coming under pressure from a drop in heavyweight tech.

UBS also flagged a bullish outlook for UK equities, raising its year-end target for the FTSE 100 .FTSE to 7,600 from 7,200- a 17.6% premium to its 2020 close.

But the bank warned that a sharper-than-expected spike in bond yields posed a threat to any recovery. A slower exit from virus-led lockdowns and vaccination hiccups are also downside risks.


(Ambar Warrick)

*****


S&P 500: TURN-DATE TUMBLE, OR TIME TO THROTTLE UP? (0900 EDT/1300 GMT)

The S&P 500 index .SPX ended Monday at a record high. However, with the Northern Hemisphere's spring equinox this Saturday, it may shortly become clear whether the benchmark index is on the verge of a moon-shot to fresh records, or if the equinox's orb of influence will coincide with a reversal.

Proponents of Gann Theory, or methods of technical analysis developed by trader W.D. Gann, may look for either acceleration of the prevailing trend, or a reversal, around the summer and winter solstices, as well as the fall and spring equinoxes.

Just looking back over the past year, there has been interesting market action around these events:



The 2020 spring equinox took place on Thursday, March 19, at 11:49 PM EDT. Two trading days later, on March 23, the S&P 500 put in a surprise bottom that ended the more than 30% February/March bear market.

The 2020 summer solstice then occurred on Saturday, June 20, at 5:43 PM EDT. Earlier that week, the SPX abruptly ended what was a more than 8% one-week slide.

The 2020 fall equinox took place on Tuesday, September 22 at 09:30 AM EDT. Just one day later, the SPX concluded what was a more than 10% intraday drop from its early September high.

Most recently, the 2020 winter solstice occurred at 5:02 AM EST on December 21st. The SPX ended a more than 2% decline that day, and has since tacked on another 9% into Monday's high.

The 2021 spring equinox occurs at 05:37 AM EDT on Saturday, March 20.

Meanwhile, just as this potential turn date arrives, the SPX is up five straight days nL1N2LD27G, and nearing a more than 10-year channel resistance line that now resides around 4,010, or just 1% above Monday's finish. nL1N2K7193

This, as the Dow Industrials .DJI, up seven straight days, ended Monday within 0.5% of a 92-year resistance line. nL1N2LD0ZV

Thus, action may be about to heat up, one way or the other.


(Terence Gabriel)

*****


FOR TUESDAY'S LIVE MARKETS' POSTS PRIOR TO 0900 EDT/1300 GMT - CLICK HERE: nL1N2LE0RG








SPX03162021https://tmsnrt.rs/3bRcuq3

STOXX 600 vs S&P 500 in 2021https://tmsnrt.rs/3qOZpl7

earnings growthhttps://tmsnrt.rs/3tCXm5J

(Terence Gabriel is a Reuters market analyst. The views expressed are his own)