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THE IRISH BANKS RALLY HAS LEGS (12:25 GMT)
Irish banks have outperformed the STOXX 600 Banking Index (.SX7P) since the start of 2022.
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Year-to-date, shares of Bank of Ireland (BIRG.I) have jumped 37%, while shares of AIB (AIBG.I) have risen 27%, both outperforming the pan-European banking index, up 14% in 2022.
According to Barclays, the Irish banks’ rally still has legs.
“We remain positive on Irish banks, seeing benefits from an improving Irish outlook and rising rates,” Barclays analysts said.
“We see wealth management and insurance growth as key to revenue
diversification, alongside the benefits of mortgage market consolidation and rising rates,” they add.
FED TIGHTENING, A ROADMAP FOR EQUITIES (11:12 GMT)
Tensions in Ukraine are the main concern this week, but that only adds to simmering concerns over a rate hike that could heat up as the Federal Reserve nears the start of a policy tightening cycle during of next month’s meeting.
No wonder investors continue to wonder if the economy and financial markets will be able to absorb it.
JP Morgan seems optimistic.
“Typically, within a few months around the first rise, stocks fall in the single digits. Stocks have tended to strengthen 3-4 months after the first rise and reach new all-time highs within 6-12 months,” they said. said US investment strategists. said the bank.
“The correction should be seen as a tactical move, not a fundamental change in direction. The start of policy tightening is, the vast majority of times, a confirmation that the cycle has legs, rather than a signal for its end” , they added.
98% OF THE STOXX IN THE RED (0906 GMT)
Warnings of a possible impending Russian invasion of Ukraine have put investors in security-seeking mode. And the sell-off in European stock markets makes no distinction.
98% of the STOXX 600 index (.STOXX) is in the red; no sector is in positive territory; and even oil stocks (.SXEP) are under pressure, as oil prices have reversed from hitting 7-year highs.
Travel (.SXTP) and Banks (.SX7P) bear the brunt of the selloff, as traders ponder possible damage to the economy if tensions escalate further. A eurozone volatility gauge meanwhile is up more than 9 points to its highest level since Jan. 24.
The STOXX was last down 2.9% to hit a 3-week low.
Few were the winners. Among them, the British defense group BAE Systems climbed to 0.7% before turning red.
LOVE IS NOT IN THE AIR (0750 GMT)
Central banks and their interest rate intentions take a back seat to markets on Monday, following warnings that Russia could invade Ukraine at any moment.
Asian equities ex-Japan are down about 1.5%, the Tokyo Nikkei slipped more than 2% and European stock futures are significantly lower.
Oil prices rose to their highest level in more than seven years on fears that a possible invasion of Ukraine could trigger US and European sanctions against Russia and disrupt energy exports.
Brent crude was up more than $1 above $95 a barrel.
Hectic diplomacy is underway to prevent war; German Chancellor Olaf Scholz travels to Kiev on Monday and then to Moscow on Tuesday for talks with Russian Vladimir Putin.
The BBC also quoted Ukraine’s ambassador to Britain as saying the country could drop its NATO bid to avoid war with Russia – potentially a major concession to Moscow.
Meanwhile, the Russian ruble fell 0.5% against the dollar, missing out on a $95 oil price.
Another consequence of the tensions is that investors have slowed their exit from safe-haven debt. Yields on German bonds – considered among the safest assets in the world – fall at the start of European trading.
The Federal Reserve’s latest comments also appear to dampen speculation that the Fed may aggressively hike rates by 50 basis points in March to contain inflation.
Being too “brutal and aggressive” with rate hikes could be counterproductive to Fed goals, San Francisco Federal Reserve Chair Mary Daly said on Sunday, signaling she’s not ready yet. out of the gate with a half-percentage-point interest rate hike next month.
Key developments that should further guide markets on Monday:
– ECB President Christine Lagarde speaks
– European benefits: Poste Italiane, Temenos
– Telecom Italia board meets KKR M&A offer
– Singapore DBS Bank earnings rebound, rate hike outlook improves outlook
– BoE to hike rates again in March, inflation to peak soon after – Reuters poll
EUROPE SEEN DOWN AS TENSIONS IN UKRAINE RISE (0733 GMT)
European stocks are set to start the week in a clearly risky fashion as US warnings that Russia could invade Ukraine at any moment boosted investor demand for safe-haven assets.
Euro STOXX 50 and FTSE index futures fell 2% and 1% respectively after losses in Asia where oil prices hit seven-year highs, although US contracts stabilized somewhat after heavy losses on Friday.
The United States said on Sunday that Russia could invade Ukraine at any time and could create a surprise pretext for an attack, as it reaffirmed its commitment to defend “every square inch” of NATO territory. Read more
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