Although today was a much more encouraging morning of results, everything else felt quite gloomy early doors. Eurostoxx 50 traded back below the September lows of 3097 for most of the morning and wasn’t too far from the June lows of 3054 (3102 last), but has since recovered marginally. In Germany, we were used to associating the DAX with the “winners” but things changed since yesterday. The index made a 3m closing low and it is trading right at its 200 dma today (for the first time in 3 months – wow).  Volumes not very encouraging either as they keep suggesting that conviction comes on the sell offs (up +30% vs 20d AVAT).  Across the pond, history tells us that  tomorrow is the best day of the entire year for the S&P 500 so not everything is negative.

We certainly started the week on the wrong foot. US stimulus pack – talks ongoing but more people coming to the conclusion that there won’t be one before the elections. Brexit – talks extended but still uncertain. Virus restrictions – Spain announced a national night-time curfew and Italy tightened its restrictions once again. Interesting one from the UK though, this time talking about decreasing the quarantine time (for those who test positive) to 7-10 days. With little to cheer about, EU equities are mostly in the red today. All indices are trading down with the DAX underperforming its peers by far (made a new 2m rel vs SXXE earlier ). SAP not helping the index much after a torrid set of results this morning (full details on movers section above).

After a less disastrous debate overnight and another stampede of beat headlines this morning, today couldn’t go any other way. EU equities ticked higher since the open and feels like they are pretty firm to stay there. Elsewhere we had the UK signing a trade deal with Japan – hurray! Obviously Brexit the important one, and we’ve had Reuters hinting at a French compromise on fisheries, sending sterling higher. FTSE 100 the only index trading well above its AVATs (drive by financials), trading +40% vs 20d AVAT.

QUOTE OF THE DAY “We know people want to be able to enjoy a Guinness when they choose not to drink alcohol without compromising on taste” Gráinne Wafer (Global Brand Director for Guinness) as he introduced the new non-alcoholic beer KEY INDEX MOVES   Stoxx50 FTSE DAX FTSEMIB ▼ -0.4% ▼ -0.2% ▼ -0.4% ▼ […]

Europe is in the red today as the scent of rotation hangs in the air. We’ve seen a move into cyclicals /value/post-covid recovery names funded by profit taking in recent winners. It is now four days in a row that Cyclicals have outperformed Defensives, making a new 6m relative high. Despite the sea of red, there lacks a sense of panic given volumes have remained light. Keep an eye on the VIX – testing 30 today (key resistance we are watching, 30.33 last), next target at 40. Support levels to watch include 5778 on the FTSE 100, 12341 / 12253 on the DAX and 6500 on the IBEX. Also note a weaker dollar is helping Basic Resources stocks and the sector is the only one trading up (even if just about, +0.2%).

That’s more like it wasn’t it? Busier morning here at Redburn as we woke up to an eventful pipeline of European earnings. I was slightly worried about equities following  the weakness we saw in the US overnight but today’s results did a good job of boosting the market (with most ahead of expectations). Volumes more encouraging too with all indices trading well above their 1d AVAT and some showing signs of life vs the last 20 days. Today is not even the busier day of earnings this week so we expect vols to stay healthy for the rest of the week.

I’m back after a week off and I must admit that today was a bit of a weird one to come back to! Covid news all pretty deflating across the board including Wales announcing a short national lockdown, Italy confirming stricter measures and one of UK’s scientific adviser (Jeremy Farrar) stating the UK needs an immediate three-week national lockdown over the weekend. Volumes not very encouraging either with EU indices trading 30% below their 20d AVATs. Euronext issues clearly not helping the cause! For now we have a couple of busy earnings days to look forward to so let’s hope that things pick up throughout the week.

Europe has pulled itself up off the canvas today, with indices in the region paring back around half of yesterday’s wobble. Even a body shot from Boris Johnson hasn’t been enough to thwart the intraday recovery, with his threat that the UK will begin preparing for an Australia-style agreement (read no-deal) proving only a glancing blow to Sterling. Since then we have seen action from the European side, with Von der Leyen sending a team to London to ‘intensify’ talks. Feels more like bluster from Johnson than a walk out hence the mild reaction, but still not helpful for companies trying to plan for the future.

It seems that enough is enough.

After days of bobbing and weaving around market fluctuations, the collective groan from investors was almost audible this morning. European indices gapped lower at the open, as the likelihood of a pre-election US stimulus breakthrough continues to fade, while closer to home further lockdowns in London and curfews in the bloc only soured sentiment further, as did underwhelming earnings from heavy hitters such as Roche. The sell off today has sparked investors into action with volumes flooding back, with indices for the most part well above 20d AVATs. The VIX is higher, as is its European counterpart the V2X, though the still remain within the 25-30 range. We would need to see an upward breakout to really feel that the panic button is being hit.

A duck swimming gracefully on a serene surface, though its’ legs are paddling furiously below is the image that springs to mind when looking at markets.

European indices today are generally flat, and volumes remain lacklustre versus their 20d AVATs. Despite this, it has felt busy again on the desk, as we are starting to see the animal spirits awaken from their summer slumber. Both average order sizes and natural liquidity inquiries have increased markedly this week, which are both promising indicators that volumes are returning. We also had a raft of model updates out from the teams in preparation for the impending earnings, and a downgrade in Hargreaves Lansdown back to sell to add to the mix. We’re (not trying to get ahead of myself, but finding it hard to contain my excitement) back baby!