EUROPEAN DIVIDEND MARKETS: "NOT MUCH JUICE LEFT" (0920 EST/1420 GMT) Dividend futures in Europe still offer a small discount, e...

European dividend markets: "Not much juice left"



Dividend futures in Europe still offer a small discount, especially on 2024, but for Barclays the recent market rally means the risk/reward isn't enough for investors to jump in.

"Not much juice left," says strategists at the UK bank led by Emmanuel Cau. "We see a mild earnings recession next year, which dividends and dividend futures for 2024 can probably withstand, although there are risks to the downside if the economy turns out to be worse than expected".

According to the UK bank, the discount at which 2023 dividend futures currently trade at is in line with the historical standards, while the bigger 10% gap on 2024 is "reasonable" given earnings risks next year.


The S&P 500 index

is once again nearing its 200-day moving average (DMA):

On Friday, the benchmark index hit 4,034.02, a more than two-month high. With that push, the SPX came within 0.6% of its 200-DMA, which ended Friday at about 4,057.

This closely watched long-term moving average is descending around 3 points per session, and will be in the 4,055 area on Monday.

Of note, mid-August SPX strength was capped nearly perfectly by the 200-DMA. On August 16, the SPX hit a high of 4,325.28, stalling just shy of the moving average which was just over 4,326 that day. The index then sank to new lows in October.

At that time, however, the 200-DMA was closely packed with the resistance line from the early-January high. Now, however, there is greater separation. That line will come in around 4,115 on Monday.

In any event, the market appears to be rigging for another collision with the 200-DMA, but it remains to be seen whether action will play out as perfectly as it did in August in terms of signaling the end of a counter-trend rally.

Indeed, the market may breathe a sigh of relief if the SPX can close above this hurdle. That said, the SPX would still have other obstacles to navigate around, including the resistance line. In premarket trade on Monday, CME e-mini-S&P 500 futures ES1! are suggesting the SPX is poised to fall about 30 points, or around 0.7%, at the open. If so, the SPX will dip back below the 61.8% Fibonacci retracement of the August-October decline at 4,006.81. There is additional support in the 3,919-3,906.54 area, which includes the 100-DMA, the 50% retracement of the August-October slide, and the November 17 low.