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A GAMESTOP FEEL TO EUROPE'S OPEN (0836 GMT)
If some European retail investors were suffering from GameStop FOMO, today's open on the old continent might come as a some of kind of relief.
The retail frenzy short squeeze market action seems to be spilling to the other side of the pond.
German stocks Evotec and Varta were briefly at the top of the STOXX 600 during the first minutes of trading amid market chatter that Melvin Capital Management, reportedly on the wrong side of the GameStop surge, is being forced to unwind its short positions.
Both stocks have now cooled off a tad and are up about 9% at the moment. Similar move for CD Projekt, another short bet of Melvin, which was last up 9%.
LVMH was expected to be the star at the open but the French luxury giant is only up 1.6% after better than expected sales.
The weight of LVMH is nevertheless helping Paris' CAC 40 (+0.3%) which is one of the only regional blue chip index in positive territory at the moment.
Overall the STOXX 600 is down a bit over 0.1%.
Another surprise of the open is the tech sector, which is losing 1.1% despite the good results of Microsoft and the optimism for the incoming update of Facebook and Apple.
(Julien Ponthus)
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IT'S ALL ABOUT THE FED (AND FAANGS) (0804 GMT)
The U.S. Federal Reserve concludes its first meeting of the year later on Wednesday and Chairman Jerome Powell will likely reiterate that it's too early to discuss tapering asset purchases.
Financial markets, where 10-year Treasury yields hit 10-month highs earlier this month on expectations of a fiscal boost from President Joe Biden's adminstration, will be watching closely.
So far, there is no sign the Fed will veer from its current stance. Interest rates are pinned near zero and no change is expected for perhaps three years to come. The economy remains about 10 million jobs short of where it was last February.
Still, a note of caution is apparent in equity markets, off their highs, and currencies too with the dollar drifting sideways.
Ongoing concerns surrounding the vaccination process and virus mutations may also weigh -- global coronavirus cases have now surpassed 100 million. (Full Story)
But upbeat earnings from Microsoft MSFT.O are providing support -- its shares rose 5% in extended trading on Tuesday after it reported its Azure cloud computing services grew 50%. Microsoft shares gained about 41% last year as COVID-19 shifted computing to areas where the software maker has bet big.
All eyes now on Facebook and Apple earnings later in the day.
South Korea's LG Display Co 034220.KS meanwhile reported its highest quarterly profit in over three years on Wednesday and Profits at China's industrial firms grew for the eighth straight month in December. (Full Story) (Full Story)
And for those concerned that an "irrational exuberance" is taking hold in stock markets, GameStop should remain in focus after skyrocketing for a fourth straight day on Tuesday thanks in part to a tweet from Elon Musk.
Other key developments that should provide more direction to markets on Wednesday:
* German consumer confidence data * U.S. corporate earnings: AT&T, Boeing, Blackstone, Nasdaq, Apple, Facebook, Tesla, Whirlpool * SEB Q4 net profit tops forecasts, targets higher dividend * U.S. to sell $28 bln of 2-year notes, Germany to sell 4 bln euros of 10-year Bunds * Markets watching for syndicated bond deal from Greece *Unicredit holds board meeting; sources say Andrea Orcel to be new CEO
(Dhara Ranasinghe)
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MORNING CALL: BIG DAY, SLOW START (0632 GMT)
European futures are down about 0.25% ahead of what's expected to be a heavy day in terms of news.
While the overall direction of travel seems to be settling towards negative territory, Microsoft's big gains overnight on Wall Street will most likely give a boost to the tech sector back in Europe.
With optimism growing for Apple and Facebook, the other U.S. mega caps reporting today, the tech sector will definitely be a hot spot.
The banking sector might also benefit from Swedish bank SEB reporting higher than expected fourth-quarter net profit.
Among lenders, UniCredit will be in the spotlight as it is expected to name Andrea Orcel as its new chief executive.
A positive sign for energy stocks is oil prices on the rise after data showed U.S. crude stockpiles fell unexpectedly last week and China, the world's second-biggest oil user, reported its lowest daily rise in COVID-19 cases.
There's however the possibility a number of investors will decide to stay and watch from the sidelines before the Fed announces the results of its two-day policy meeting.
(Julien Ponthus)
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