LIVE MARKETS The unstoppable European car race

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THE IMPARABLE RACE OF EUROPEAN AUTOS (08:50 GMT)

The pan-European STOXX 600 index (.STOXX) is stable as a wave of risk aversion sentiment from Asia has spread to Europe, but the auto sector continues to post hefty gains.

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On an otherwise bleak morning, the auto index (.SXAP) climbs around 1%, to hit a jump of almost 7% this week, hitting its highest level since November and setting for its best week in 11 month.

“Automobiles are very inexpensive, but profitability is strong given an excellent price / mix, even on lower volumes, and chip shortages are expected to ease,” said Barclays, who is overweight on sectors.

Automakers Stellantis (STLA.MI) and BMW have announced that Stellantis’ Chrysler brand plans to switch to an all-electric lineup by 2028, while BMW achieved record sales in 2021. read more

Here’s how individual auto stocks are behaving across Europe this morning:

Auto

(Joice Alves)

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END OF PARTY BEFORE BEGINNING (0803 GMT)

The euphoria seen in global equity markets in the first two trading days of the year already appears to be fading.

Asian stocks outside of Japan are down 1%, US equity futures are showing weak open and European futures are mixed.

The culprit – the rise in US Treasury yields triggered by mounting speculation that the Federal Reserve could begin its rate hike cycle as early as March.

Money market futures have a roughly 64% chance of a quarter-percentage point tightening by then, with investors fully accounting for such a move by May.

And yes, liquidity is thin and traders have not yet fully returned to their desks after the year-end break. But don’t underestimate the signals coming from the US bond market – where yields on short-term interest-sensitive bonds are near their highest levels since early 2020.

Yields on benchmark 10-year bonds and their inflation-adjusted counterparts are up 13 basis points each this week.

Thus, the minutes of the December Fed meeting, released at 19:00 GMT, will be scrutinized for signs that policymakers are ready to tighten their policy.

There are other reasons why a more cautious rating prevails in the markets today. The first is the fear that the rapidly spreading Omicron could lead to labor shortages.

The United States reported nearly a million new coronavirus infections on Monday, the highest daily tally of any country in the world and nearly double the previous US peak set a week ago. Read more

China Evergrande Group (3333.HK) also remains in the spotlight. Indebted real estate developer to seek six-month deadline for redemption and coupon payment of 4.5 billion yuan ($ 157 million) bond in meeting with bondholders this weekend . Read more

Key developments that should provide more direction to the markets on Wednesday:

– Sony turns to electric cars for next big hit read more

– Gas prices rise in Europe due to tight Russian supplies read more

– The sale in Italy of new 30 years via a banking syndicate could take place as early as Wednesday

– Final PMIs of India, Italy, France, Germany, Brazil and the United States

– Consumer confidence in France in December, preliminary CPI for December in Italy, data on the development of employment from ADP in the United States in December have been released

US bond yields on the rise

(Dhara Ranasinghe)

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YOUR RISK-OFF (07:35 GMT)

Futures point to a flat lower start to the day for European exchanges, reflecting risk aversion sentiment in Asian stocks, which fell as higher US Treasury yields weighed on global technology companies. Read more

After the pan-European STOXX 600 index (.STOXX) hit record highs on Tuesday, DAX, Ibex and FTSE futures are down slightly, Eurostoxx 50 futures are flat.

In the calendar, the final EZ PMI data and consumer confidence in France and the data on consumer prices and inflation for Italy.

Tonight, the minutes of the December Fed meeting, scheduled for 19:00 GMT, could highlight the new sensitivity of US policymakers to inflation and their willingness to tighten policy.

In terms of the news, businesses can find some solace in the words of UK Prime Minister Boris Johnson. England could withstand a surge in COVID-19 infections without further restrictions, as Britain reported another daily record of cases.

(Joice Alves)

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