tv Bloomberg Markets European Open Bloomberg November 2, 2021 4:00am-4:30am EDT
modi pledging net zero by 2070. 0 says it will sign the global pledge. let's check in on the futures pointing marginally lower in europe, flat in the u.s. after another record session on wall street. investors digesting the earnings that continue to come through. some of the big names with earnings beating. the reserve bank of australia front and center, looking ahead to the fed wednesday, and the bank of england thursday. let's check in on how things are shaping up, the spanish ibex down 0.5%. the ftse 100 down 0.2%. cop 26 continues in glascow. the market is pricing in a if you percent chance of a rate hike by the blb on thursday.
cac quarante is down by 10 points, over a 0.1%. that's check in on the cross assets. iron ore is back in focus today, falling more than 5%, close to 6% on the back of the news that supply in terms of steel production in china is likely to be curtailed. weak demand for iron ore. on the back of that decision from the rba to drop its yield curve control. you see demand for the three year yield -- i should say bond, the yield slightly lower. we have commentary from the head of the reserve bank suggesting it is unclear when the bank will look to raise rates, focused on the fundamentals of the data. that is the aussie dollar now, lower by 0.7%, $.74 per u.s.
dollar. let's get the bloomberg business flash. laura: a rise helped boost profits in the third quarter, the london-based profit rose to $1.8 billion, beating forecasts. loan provision were double analyst estimates. >> as we look forward every hundred basis points of improvement on a four-year basis, this was over $1 billion. laura: singapore's top central banker says he is watching for signs of accelerating inflation, and is ready to act, underscoring how policymakers are focusing attention on rising prices. he spoke to us exclusively. >> we know it cannot last
forever. how long it lasts is hard to say . the longer they last, the risk of inflation becomes entrenched, and expectations build up. that is a big unknown, and a risk factor. laura: raising $8.4 billion in an ipo that could come the biggest ever by an ev company. they plan to sell one her 35 million shares. at the top of the price range, it would have a market value of $53 billion. it has attracted investors such as blackstone. that is your bloomberg business flash. tom: european equity markets currently trading essentially lower by 0.3%. gains over in germany. the ftse is flat in the u.k.,
down 0.2%. the reserve bank of australia vowing -- bowing to market pressure, abandoning its yield target and is open to raising rates earlier than its previous guidance. joining us for more is eddie van der walt. is this an example of a central bank capitulating to the bond market? eddie: whether it is capitulating or they got it wrong in the market got it right, i am not sure, but the market was ahead of the central bank. we are also seeing a split in places like the ecb, where they are saying we will not tighten next year, and the market is saying you might have to. this feeds through into other markets, particularly at the bank of england. with the fed, we are clear on what they will do, they will taper -- but the question is how fast?
how quickly we get to the tightening of rates, and at the moment across-the-board we see markets saying inflation is getting away from you, and you will have to start paying attention at some point. tom: the importance of the read across of what is happening in australia, and as you say the timeframe for the fed to taper, we have more corporates looking strong. is there more in the tank for these earnings in the first quarter and first quarter of next year? eddie: we have had strong earnings, not as strong as in the previous quarter. we have seen a little softening, but we are getting good readings. the question is, as we go to the end of the year, whether this rally starts to taper off, i think the fact is if there was any fear of a taper tantrum coming in and market, that is gone because we know the taper
is coming, and we have not seen any feedthrough. where would the trigger come from? we have rising inflation rates in some parts of the world, but there is nothing to spook markets at this time. it is hard to see how the stock park at capitulating. tom: what about the supply chain constraints? we have been hearing about it, we see what is happening in the ports in l.a. or long beach, to what extent will that be sustained? do you see any signs of the data that the supply chain constraints are starting to ease? eddie: absolutely. we are looking at the chip lead times, and some are shortening. the pace at which you have to wait longer has slowed. give the thing we are seeing is some shipping indexes have come down significantly from early
october. we are still at elevated levels, and there are no signs the supply chain issues will disappear overnight, but supply chains and the people who run them are smart, and they adapt over time. that is what we are starting to see. the question is whether that comes early enough to dissipate pressure we have seen in wages. if the wage inflation comes through before supply chains softening, it is too late. tom: that changes the dynamics for the central bank, they have been key about that. excellent insights from our mliv's eddie van der walt. the cop 26 talks are underway with world leaders setting out plans for curbing global warming. francine lacqua is on the ground, she has been there since sunday. what are the big surprises? india and modi with his pledge? francine: yes, it reinvigorated
the talks. the devil is in the detail, and we need to figure out how india will transition this. if you look at the big three emitters, china, the u.s. and india, they are the ollie one who came out with this pledge. it took everyone by surprise. if they can stick to it and find $1 trillion to finance this, this is in line with the 1.5 degrees pledge we are trying to achieve. it was something a lot of commentators were happy about, especially if the other two big emitters -- the u.s., because the president is hamstrung, he could not pledge anything new -- and china with no new pledges, not even showing up, no video address. the other thing is methane, this
is a quick fix if people pledge to it, it would cut methane 30% from the 2020 levels by 2030. it is something the g20 tried to rally countries. now we have 90 signatories with this joint u.s.-eu involvement. tom: a big step up from india, but as you say, the devil in the details. francine lacqua and glascow covering all of this and speaking to big names across the policy space and the corporate space. she will be back at 8:30 with a conversation with the u.k. ceo of deutsche bank. a big day for earnings, we will dive into the corporate news. this is bloomberg. ♪
wall street and in europe. we have a line crossing in regards to tesla. it is falling in the premarket 2% with elon musk saying on twitter the deal is not a done deal. hertz had agreed to buy 110,00 0. musk pushing back that this is set in stone. it has had a stellar run the laew days. let's recap what is happening in the earning space, a big day with corporate numbers from bp, standard charter. anna edwards spoke to the ceo, talking about consolidation and continuing demand. that is a company that reported third-quarter ebit close to $7 billion u.s. bp coming in down 0.2%.
they announced a $1.25 billion share buyback. standard chartered down almost 6%. did not raise the earnings outlook for the year. they expect income growth from 5%-7% for 2022. for more central bank action, let's bring in louise dudley, portfolio manager of global equities, hermes fund managers. thank you for joining us. what is your take of where things stand on the earnings picture, and whether we are looking at peak earnings given the backdrop of growth and concerns about inflation? louise: it is a bit more positive than people expected. expectations have come off a bit for september, and companies are coming in strong with fundamentals supporting some outlook pictures for the
economy. yes, inflation, a buzz word. supply chain constraints coming in as well. people are seeing demand, that is pulling that through. people are dealing orders rather than canceling, so seeing strong demand focusing on the outlook, and record beats. it is great. tom: do you feel you have clarity which part of the equity market is best positioned to weather ongoing supply constraints? louise: staples have suffered the most. a lot of price hikes, and in general europe versus the u.s., the u.s. is stronger. europe maybe still to come, but growth sentiment is working well for the u.s. tom: where are you finding a ballast for your portfolio?
louise: we look for a broad range of characteristics, very sensitive to volatility we are seeing. last week very much in terms of growth sentiment working strongly. yesterday we had the rebound into value, positioning for the ongoing cyclical recovery. these value names with rate expectations coming in. it is about that quality but the value tilt as well. it is a balance coming in, and one area is the cyclical area that has yet to rebound. he expects that to do well -- we expect that to do well. tom: how do you want to look and change the makeup of that portfolio if the analysis is correct when it comes to the rate hike cycle? the view you will see rate hikes
sooner than expected but for a shorter period. if that is what we get, how should investors look to reposition? louise: at the moment the market is ahead of what the central banks are doing. the central banks are almost following the market a little bit. not too worried about any big shocks. the central bank so sensitive to that. they do not want to disrupt the strong rebound. to a certain extent, maybe the market got it right. definitely in terms of inflation numbers. people are so cautious about that spiraling away, but actually we are seeing modest moves from the central banks and a lot of signaling as well. tom: where you stand in terms of your regional bias? i am focused on u.s. versus europe. is the bias toward you given that tilt of value toward
cyclicals? louise: we should have more strength within the u.s., and the u.s. continues to be a very strong market, doing well the last couple of years. the consumer in the u.s. is very strong. they have a lot of support from the infrastructure bill still coming through. maybe the main thing is underway, emerging markets. that is an area still struggling with the delta variant, a loss of disruption, manufacturing not coming through as strong as they have been. maybe that is where we are seeing the weakest area in contrast to the u.s. tom: underway emerging markets, overweight in the u.s. louise dudley, portfolio manager of global equities, hermes fund managers continues to see an upside for equities. coming up, bp boosts its buyback, third-quarter earnings
of targets we are focused on -- last year which has a number of targets we are focused on. we are well on track for that. oil prices, we are doing very well. very focused on the operational reliability of the business, reliability up, availability up in the quarter, very focused on capital discipline, being very careful, 13 billion dollars going into the business this year. you are seeing at these prices a business that is a real cash machine, and that allows us to do what we did in the second quarter. we believe we can raise it 4% per annum through 2025 at $60 oil. $1.25 billion, that is $3 billion this year so far, and we think we can do $1 billion a
quarter to 2025 at $60. tom: that was the bp ceo, bernard looney speaking to us earlier on the third-quarter earnings. we are joined by will kennedy. what are the main takeaways? these investors are not overly pleased by the results despite the share buyback. will: it was a solid set of results, came in ahead of what they were expecting, more buybacks for investors. the bp sue could have trading business performed well, a lot of money out of the wild swings in global gas prices. it is a little surprising, investors were expecting more in terms of buybacks. that is the mantra for investors in the oil and gas sector, show
us more buybacks and returns. i do not think management teams can go fast enough. tom: they need to continue to invest as part of the transition, and we heard of the capex. do we have clarity where that will be channeled? will: 13 billion was in line with what they said previously. they are keeping a lid on spending in the oil and gas business and the energy business . that puts them out of step with the rest of the industry which has a slightly higher capex spending. that is on the backdrop of rising costs, so you are getting less bang for each dollar you are spending. that capital discipline is a sign that looney is focused on maximizing shareholder returns, rather than invest too much. tom: it sounds like you think
they could position for further buybacks? will: he signaled that, more than $1 billion a quarter, signaling they will increase the dividend 4% per year. that is very much the strategy for looney, a lot of clear guidance to investors about what they can expect. the problem for companies like bp, a lot of investors remain opposed to investing in oil and gas. a lot of investors are exiting the industry. those who are still there are skeptical of the value investing in new energies for these oil companies. if we compare bp and shell, exxon and chevron are much more about -- the skepticism is about what is the strategy for bp. tom: who is leading in terms of
the energy transition? will: i think the europeans are going fastest. to tell shell the question for the industry, do the investors want that, or do they want the oil majors to build low carbon businesses? that is the existential question for the oil and gas industry at the moment. tom: thank you very much executive entity for energy and commodities, will kennedy breaking down the bp earning results. the broader context more generally. up next, we go to glasgow. francine is on the ground. we will discuss finance with tina lee, ceo u.k. & ireland, deutsche bank. basic resources is dragging down
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