LIVE MARKETS-Euro 2020: Goldman Sachs & the home advantage

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EURO 2020: GOLDMAN SACHS & THE HOME ADVANTAGE (1252 GMT)

Maybe playing at home isn't so much of an advantage

Goldman Sachs built a prediction model for the Euro 2020 football tournament which relies notably on teams playing at home getting a big boost.

So far it hasn't played out that well.

"Yesterday's biggest surprise for our model came when Spain drew at home against Sweden in a goalless game", they admit, adding "our model’s strong home advantage prediction was also challenged when Scotland suffered a 2—0 defeat against the Czech Republic in Glasgow".

The model's setbacks will no doubt reassure French fans who will see 'Les bleus' play 'die Mannschaft' in Munich this evening.

Goldman Sachs' (German) analyst Christian Schnittker - hoping for the home advantage to make a come back - predicts a 2-1 win for Germany. However, he also sees Hungary succumb 1-2 to Portugal, in Budapest!

Here are some of their predictions for the next week:

(Julien Ponthus and Karin Strohecker)

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EUROPE MON AMOUR (0849 GMT)

One of the key takeaways of the latest BofA survey is that investors are highly bullish on Europe and even though the rally in the region's stocks since last March has been the sharpest in two decades, global investors expect there is more to come.

Check out these BoFA findings, they speak for themselves:

* 41% are OW European equities, the highest since February 2018 and up from 35% last month

* 30% would like to be overweight Europe over the next 12 months, the highest since August 2017. Only 6% say the same for EM, down from a record 44% in Jan

* 20% think Europe has the most favourable profit outlook over the next 12 months, up from -35% last May. 19% think the U.S. is best positioned, down from 61% last May

* 92% expect a stronger European economy over the next 12 months, only marginally lower than in previous months. Global growth expectations have started to roll over, however

* Interest in European banks has hit a 3-year high, with a net 24% of respondents being overweight (Danilo Masoni) *****

 

STOXX EYES 8-DAY WINNING STREAK (0736 GMT)

European equities are on a roll.

A gain of around 0.4% in opening deals has put the STOXX 600 benchmark on course for its eighth straight day of gains. The last time it did so it was more than 2 years ago, in April 2019.

The milestone illustrates how investors are confident in continued central bank support even as the economic recovery gather pace and inflation pressures mount.

Here's your snapshot:

(Danilo Masoni)

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NO TAPER TRAUMA IN SIGHT (0640 GMT)

Pre-Fed price action would suggest markets aren't anticipating any big trauma from policy normalisation at the world's leading central bank. And that's helping keep the bulls in play.

Equities in Europe look set to nudge up and stay around yesterday's fresh historic peaks as the recovery-induced trade displays its full potential, and Wall Street too is poised for a positive start after yet another record close.

Volatility gauges on both sides of the Atlantic have dipped to new pre-pandemic lows and bond yields across developed counties are moving around the mid point of the last three months' trading range, illustrating the fairly relaxed mood.

The two-day Federal Reserve meeting kicks off today and although it is not expected to announce any plan to pare its bond purchases it may offer hints the discussion has began, amid some concerns about growing inflationary pressures.

JP Morgan said the upcoming tapering process was unlikely to hurt its bullish view on equities for the second half of 2021. It expects the Fed to start tapering early next year.

Back to today's agenda, investors will keep an eye on a number of ECB speakers but that comes after abundant reassurances - the latest from president Lagarde yesterday - that it's too early to even talk about withdrawing support.

And in Asia Pacific, similar soundings came from Australia, where its central bank members said in the June meeting's minutes that it was too early to end the bank's bond buying programme.

Meantime in Japan a former Bank of Japan policymaker said the bank must eventually consider ways to unload its huge holdings of exchange-traded funds after tapering bond and ETF purchases. But the timing will be years away.

On the corporate front, the U.S. and Europe are expected to announce a truce in their 17-year-old dispute over aircraft subsidies on Tuesday. That could help planemakers Boeing and Airbus and also bring relief to other industries.

Good news also on the COVID-19 front. A new analysis has shown that vaccines made by Pfizer and AstraZeneca offer protection of more than 90% against hospitalisation from the Delta coronavirus variant.

Finally, bitcoin steadied after climbing above the $40,000 mark following remarks from Elon Musk who said Tesla may resume allowing bitcoin transactions.

(Danilo Masoni)

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EUROPE SET FOR POSITIVE START (0537 GMT)

European shares are expected to open slightly higher after setting another record close on Monday as investors sound confident the Fed would maintain its dovish stance.

Futures on the euro STOXX 50 DAX and FTSE 100 indexes are up around 0.3-0.4%, while U.S. stock futures are pointing a positive start on Wall Street later on.

The two-day Federal Reserve meeting kicks off today and although it is not expected to announce any plans to pare its bond purchases it may offer hints the discussion has began amid concerns about inflation in the world's No 1 economy.

(Danilo Masoni)

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