Bulls take control on Wall Street

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STOXX Europe 600 down 0.2%

Euro zone business growth solid in May

U.S. debt ceiling talks in focus

Wall Street futures inch lower

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A Citi analysis of positioning across futures markets shows that U.S. stocks have seen large bullish flows once again over the past week with $21 billion in new S&P 500 longs added.

The weekly flow of new longs is one of the largest seen in recent years. And the Nasdaq is seeing a similar trend with positioning even more extended.

"The momentum is clear, and positioning is increasingly one-sided. Longs outnumber shorts by more than 9 to 1," writes Chris Montagu, Global Head of Quantitative Research at the U.S. bank.

As a result, profits on long positions are building, while the small size of shorts means that any potential squeeze is going to provide just limited support, according to Citi.

"The few remaining shorts are all in loss, but a short squeeze is not likely to significantly impact markets," Montagu adds.

(Danilo Masoni)



The pound is in focus today, having hit a one-month low against the dollar GBP=D3, weighed down by the latest PMIs and data showing Britain borrowed more than expected in April.

There was also little reaction after a positive update from the International Monetary Fund, which said it no longer expects Britain's economy to fall into a recession this year.

Despite a bumpy ride over the last year amid political instability and a shrinking share of the global economy, and a longer-term depreciation in status, Dean Turner, economist at UBS, is constructive.

"No matter what you think about the UK's economic prospects, it is hard to deny sterling looks cheap on virtually any measure," he writes in a recent note.

Last at $1.24, GBP is now basically at the same level it was a year ago. With dollar weakness on the horizon UBS believes the GBPUSD cross could be trading above 1.30 by the end of the year.

A few things could make the currency more enticing, writes Turner.

The first is in the hands of the central banks. The Fed's clear leadership, which has been supportive of the dollar, is now fading, while the BoE's hawkish turn at the last meeting and persistently higher inflation in the UK could point to higher rates for longer. That could boost the relative attractiveness of the yield on UK assets.

Secondly, the recent stabilisation in energy markets has mostly corrected an imbalance in the UK trade, leading to an improvement in the supply/demand dynamics for the pound, says Turner.

Lastly is politics. Things have "settled down a bit", he says.

"Whether or not this government survives the next election, one thing seems certain: Whoever wins the general election will want to steer clear of economic drama."

(Lucy Raitano)



European shares stayed within recent trading ranges on Tuesday with losses across most sectors dragging the STOXX Europe 600 .STOXX benchmark index down 0.3% in early deals.

Declines across luxury goods companies weighed, pushing consumer stocks .S600CPP 0.8% lower, leading sectoral fallers. The STOXX Europe Luxury 10 index .STXLUXP slid 1.3% as LVMH LVMH.PA, Europe's most valuable company, fell almost 2%.

Telecoms .SX7P were on the up, rising 0.5%. BT BT.L briefly jumped 1.9% after billionaire Patrick Drahi raised his stake in the company, although he reiterated he had no plans to make a full takeover for the UK's biggest telecoms group.

Lower-than-expected quarterly inflows at Julius Baer BAER.S sent the Swiss wealth manager tumbling more than 7%, while Vivendi VIV.PA fell 8% after a regulatory filing showed top investor Bollore sold shares in the French group.

A bounce in battered real estate stocks drove the sector's index .SX86P up more than 1%.

(Danilo Masoni)



European shares were set to open without clear direction on Tuesday amid ongoing uncertainty over debt ceiling talks in Washington and ahead of PMI surveys in Europe and the U.S..

EuroSTOXX50 and FTSE 100 index futures both fell 0.1% and S&P contracts inched 0.1% higher. In Asia, stocks gave up gains after creeping to two-week highs, as caution prevailed.

In corporate news, eyes are on telecoms after billionaire Patrick Drahi raised his stake in British group BT to 24.5% but restated he does not intend to make a full takeover. The shares were seen rising as much as 3% at the open.

Julius Baer is also one to watch after the Swiss wealth manager recorded a modest rise in assets under management and money inflows in the first four months of this year. Traders said flows missed expectations.

UK utilities could come under pressure too, after industry regulator Ofwat started an enforcement investigation into Pennon's South West Water, relating to its leakage performance.

Finally, SSP forecast annual profit at the upper end of its view, betting on strong sales at its airport and railway station snack outlets. Traders said shares were set to rise at the open.

(Danilo Masoni)



Last month, better-than-expected PMI surveys helped pep markets' mood and kept stocks levitating near recent highs.

This time, economists are expecting another bullish take on the world from supply-chain managers and for services to again make up for lacklustre manufacturing. European EUPMCF=ECI and British GBPMCF=ECI surveys are due out in the morning.

Asia, however, offered a mixed entree and perhaps a warning.

In Japan, manufacturing activity expanded for the first time in seven months while services hit record growth - cheery enough to encourage the rolling juggernaut that is the Nikkei to flirt with a ninth consecutive session of gains.

Even that remarkable winning streak has been par for the course this year, though, after a similar run in March that now has the benchmark up 19% for the year and at 33-year highs.

A warning, however, came from Australia, where services growth slowed on the heels of an unexpectedly weak jobs report last week.

Australia's currency has gone sideways for three months and its gains in January - when hopes ran high for China's reopening - have vanished. Aussie stocks are likewise in the doldrums as worries over demand hold down the iron ore miners and a margin squeeze weighs on the banks.

U.S. surveys are also due on Tuesday, although the focus there is firmly on the debt ceiling talks which are so far just that - talks - without a deal and with fewer than 10 days left until the government runs out of money.

Key developments that could influence markets on Tuesday:

Economics: U.S., Eurozone and British PMIs

Speakers: BoE's Pill, Mann and Tenreyro appear before lawmakers. ECB's de Guindos, Villeroy and Enria

(Tom Westbrook)


Japan's service PMI grows at record pace https://tmsnrt.rs/425v997

Eu open https://tmsnrt.rs/3Ou8kYN


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