MARKET WRAPS

Stocks:

Banks led European stocks higher on Thursday as bond yields recovered.

The Stoxx Europe 600 rose with gains for lenders including KBC Group and the Bank of Ireland.

Credit Suisse rose 2%, as Berenberg upgraded the Swiss wealth management giant to buy from hold, saying valuation is "on its knees" due to the Archegos and Greensill issues, with the bank trading at a 26% discount to the broader sector.

"So overall, markets for now seem to be more relaxed again about the Fed and inflation risks, even if they're still pricing in a faster hiking cycle than the Fed themselves indicated in the dots last week," said strategists at Deutsche Bank led by Henry Allen.

The Bank of England will announce its latest monetary policy decision at midday London time, with investors awaiting word on whether the central bank will announce the end of its asset purchases before the scheduled date of December.

Economic surveys continued to point to reopening optimism. The German Ifo business climate index exceeded expectations with a rise to 101.8 in June from 99.2 in May. The French INSEE business climate index rose 5 points to 113, its highest level since the middle of 2007.

Tecan Group jumped 12%, as investors warmly greeted news the laboratory-instrument maker was buying Paramit Corp. from private-equity firm Altaris Capital Partners for $1 billion. Paramit is expected to generate $50 million in operating profit on sales of $280 million this year, and Tecan said the deal would immediately and significantly boost earnings per share.

Siemens' shares slipped 1%. The German business conglomerate increased its revenue growth target.

U.S. Markets:

Stock futures climbed ahead of fresh data on jobless claims and durable goods that will offer fresh cues on the pace of economic recovery.

Stocks are grinding higher this week, reflecting investors' easing concerns about higher inflation and tighter monetary policy. Money managers are growing more assured that interest rates won't rise for a while: that has sent technology stocks roaring higher in recent days and pushed the Nasdaq Composite Index to two consecutive all-time closing highs.

"In the context of strong growth, markets can digest slightly less supportive monetary policy," said Sebastian Mackay, a multiasset fund manager at Invesco. "The outlook for earnings is still pretty strong, I think central banks can afford to think about removing some of what's been put in place."

The latest data on jobless claims, a proxy for layoffs, is due at 8:30 a.m. ET. The figures released last week showed an unexpected increase, suggesting that the path to a full recovery still faces uncertainties and potential setbacks. Economists expect that filings for new jobless claims resumed their decline for the week ended June 18.

"The labor market is pivotal, it is clearly one of the targets of the Federal Reserve," said Monica Defend, global head of research at Amundi. "It's what is restraining the Fed from acting more boldly."

Data on orders for durable goods are also due at 8:30 a.m. Economists are expecting a pickup in May. Orders slipped in April, partly because the global computer-chip shortage caused backlogs in the auto industry.

Forex:

The dollar traded flat as investors digest conflicting messages by Fed officials over the inflation outlook.

Fed Chair Jerome Powell downplayed inflation concerns during his testimony to Congress on Tuesday but Atlanta Fed President Raphael Bostic said on Wednesday that a period of high inflation could last longer than anticipated.

"It is becoming apparent that there are two different views coexisting within the Fed and the tug-of-war is likely to condition the performance of the greenback and other currencies, too, over the coming months," ActivTrades analyst Ricardo Evangelista said.

The euro could weaken as the European Central Bank is likely to fall behind other central banks in withdrawing support, Societe Generale said.

Noting that the ECB posted a paper by German economist Sebastian Schmidt on Thursday arguing that fiscal stimulus could prevent a "low-inflation trap," SocGen forex strategist Kit Juckes said it seems the ECB is stepping up its campaign to prevent premature fiscal easing.

"They really will stay at the back of the queue when it comes to monetary policy normalization, and that does mean that as others raise rates, the euro will be vulnerable."

The Bank of England is likely to leave its policies unchanged in Thursday's decision but may further scale back bond purchases later this year, sending sterling modestly higher versus the euro, Rabobank said.

"Assuming a fairly stable position for U.K. markets through the summer and assuming the economic outlook remains favorable, we see scope for some extra tapering from the BOE into the autumn," Rabobank forex strategist Jane Foley said.

The BOE, which last month slowed the pace of its bond-buying, announces its policy decision at 1100 GMT.

Bonds:

In bond markets, the yield on the 10-year U.S. Treasury note ticked up to 1.489%, from 1.486% on Wednesday.

Bond markets appear to have found a new balance after the U.S. Fed-induced volatility eruption last week, and in this regard, the macro focus could move back to Europe, said Christoph Rieger, head of rates and credit research at Commerzbank.

Following preliminary June purchasing managers' surveys on Wednesday, German business sentiment Ifo data is expected to rise to a new 10-year high, he said. However, Rieger added, that similarly to PMIs, Bunds are unlikely to be impressed by better data.

Commodities:

Oil prices ticked higher after bullish inventory data. Data from the Department of Energy released Wednesday showed a sharper-than-expected fall in U.S. crude and gasoline stocks. Crude stocks fell by 7.6 million barrels last week, which was larger than some analysts had been forecasting and even larger than figures from API released a day earlier suggested.

Gasoline stocks also fell by 2.9 million barrels, while both forecasts and figures from API had pointed to gasoline stocks rising.

Gold edged lower as comments from Fed officials raise new concerns about interest rate hikes. Two Fed officials said that faster-than-expected growth in the U.S. economy meant interest rates should rise in 2022, while the central bank's bond-buying program should be pared back sooner rather than later.

"This debate is likely to keep gold in check for the time being," said Carsten Fritsch, an analyst at Commerzbank. U.S. PCE price data, the Fed's preferred measure of inflation, set to be released Friday would likely be the key focus for gold, he added. If the figures were to be stronger than expected it could prompt a slide in gold prices, he said.

Base metals slipped after comments from Fed officials reignite concerns about tightening monetary policy. Three-month copper on the LME falls 1.1% to $9,386 a metric ton while aluminum drops 0.6% to $2,420 a ton.

The Atlanta Fed's Bostic said that a much stronger recovering U.S. economy meant that he expects interest rates to rise next year and thinks the central bank should consider paring back its bond-buying program sooner rather than later. Dallas Fed President Kaplan also echoed those remarks.

EMEA HEADLINES

Visa Buys Swedish Fintech Tink for More Than $2 Billion

Visa Inc. agreed to pay more than $2 billion for Tink, a Swedish startup whose digital services connect more than 3,400 banks and financial institutions in Europe.

The largest U.S. card network is buying the financial-technology company to establish itself in Europe's fast-growing open banking market. Open banking regulation in the European Union and U.K. enables financial companies to access customers and their data at competing institutions, if the customers have granted consent.

German Business Sentiment Rises to Highest Level in More Than Two Years

German business sentiment improved again in June, reaching a more than two-year high as reopening boosted firms' optimism on current conditions and expectations.

The Ifo business-climate index came in at 101.8 points in June compared with the 99.2 points registered in May, according to data from the Ifo Institute released Thursday. The reading beats the consensus forecast from economists polled by The Wall Street Journal, who expected the index to increase to 100.5.

Siemens Raises Growth Target, to Launch EUR3 Bln Share Buyback

Siemens AG on Thursday set new targets for stronger revenue growth and said it would launch a share buyback program of up to 3 billion euros ($3.58 billion).

The German engineering conglomerate said it would target comparable annual revenue growth for the group of 5% to 7% over its business cycle of the next three to five years, up from previously 4% to 5%.

French Manufacturing Sector Confidence Levels Off in June

Sentiment in the French manufacturing sector stabilized in June after rising for six consecutive months amid the easing of pandemic-related restrictions.

Manufacturing sentiment stood at 107 in June, unchanged from May, the French national statistics office said Thursday. The reading is below economists' forecast of 110 in a poll conducted by The Wall Street Journal.

Bunzl Expects 1% Rise in 1H Revenue

Bunzl PLC said Thursday that it expects to report a 1% rise in revenue for the first half of 2021 at actual exchange rates and a 6% to 7% gain at constant exchange rates, and backed its revenue guidance for the year.

The London-listed distribution-and-outsourcing group said the impact of acquisitions will be slightly higher than underlying revenue growth, with a small impact from fewer trading days.

Talking Markets: Miners Dig In as Shares Fall After Peru Election

Shares in mining companies operating in Peru have fallen since a general election in the country in which a far-left nationalist appears to have won the presidency, reflecting uncertainty over his approach to the industry.

Anglo American stock fell 16% in the two weeks since the second leg of the presidential election took place on June 6. The company and Mitsubishi Corporation have invested $5.3 billion in a copper mine named Quellaveco, in southern Peru, which is set to become one of the world's largest copper pits when it starts operating next year.

Race Between Covid-19 Vaccines and Delta Variant Plays Out in U.K.

LONDON-The highly transmissible Covid-19 Delta variant is generating rapidly rising caseloads in the U.K., but smaller increases in hospitalizations and fatalities, in a hopeful sign that mass vaccination can prevent a repeat of the heavy toll of sickness and death seen earlier in the pandemic.

The other message is one of caution. Epidemiologists say the U.K.'s experience shows how easily the variant can spread even within populations where vaccine uptake is high. That underscores the risk of further outbreaks of Covid-19 in the U.S. and other advanced economies, as well as the urgency of widening and accelerating vaccination programs.

CDC Advisory Group Says 'Likely Association' Between mRNA Covid-19 Vaccines and Rare Myocarditis Cases

Centers for Disease Control and Prevention advisers said Wednesday that there is a "likely association" between Pfizer-BioNTech and Moderna's mRNA Covid-19 vaccines and an inflammatory heart condition in some younger individuals, but noted that cases were rare and that most patients quickly felt better.

The CDC and other health authorities still recommend Covid-19 vaccination for those age 12 and above, given the greater risk from Covid-19, which itself can cause myocarditis and other complications.

EU Aims to Beef Up Cybersecurity Amid Ransomware Boom

The European Union is aiming to step up international cybersecurity collaboration through a joint unit intended to serve as a hub for intelligence and a first-responder to major hacks.

The announcement came a day after a top U.S. official said Washington would work more closely with Brussels to counter a spate of ransomware attacks that have crippled critical infrastructure in recent weeks.

Afghan Government Could Collapse Six Months After U.S. Withdrawal, New Intelligence Assessment Says

KABUL-The U.S. intelligence community concluded last week that the government of Afghanistan could collapse as soon as six months after the American military withdrawal from the country is completed, according to officials with knowledge of the new assessment.

American intelligence agencies revised their previously more optimistic estimates as the Taliban swept through northern Afghanistan last week, seizing dozens of districts and surrounding major cities. Afghan security forces frequently surrendered without a fight, leaving their Humvees and other American-supplied equipment to the insurgents.

GLOBAL NEWS

Jobless Claims Are Projected to Resume Downward Trajectory

Worker filings for jobless benefits last week are predicted to have declined, resuming a mostly downward trend since spring that has been supported by a strengthening economic recovery.

Economists estimate the Labor Department will report Thursday that initial unemployment claims, a proxy for layoffs, moved lower last week to 380,000 from 412,000 the prior week, when claims rose by 37,000.

Hospital Stocks' Rally Points to Post-Covid Growth

Hospital stocks have trounced the market this year, and the steps they took to get through the pandemic could keep the rally going.

Hospitals were hit hard financially by the costs of Covid-19, which crimped their ability to do high-margin elective procedures. Some firms took large government grants to help them make up for losses tied to the pandemic and for treating Covid-19 patients.

Fed's Bostic Says Bond Buying Drawdown Near, Sees Rate Rise in Late 2022

Federal Reserve Bank of Atlanta President Raphael Bostic said Wednesday he has moved forward his expectations for a central bank rate rise to next year and that the time is coming soon for the Fed to pare its bond buying stimulus efforts.

"Given the upside surprises and recent data points, I've pulled forward my projection for our first move to late 2022," Mr. Bostic said in a call with reporters. Mr. Bostic said he also expects two additional increases in the federal-funds rate in 2023. The Fed official had recently said he expected the first increase in 2023.

Yellen Says U.S. Could Breach Debt Limit Deadline in August if Congress Doesn't Act

WASHINGTON-The U.S. could run out of room to keep paying the government's bills some time during Congress's August recess unless lawmakers raise or suspend the federal borrowing limit before then, Treasury Secretary Janet Yellen said Wednesday.

Congress in 2019 suspended the borrowing limit, or debt ceiling, through July 31, 2021. After that, the Treasury Department won't be able to raise additional cash through the sale of government securities and would need to deploy emergency measures to keep paying the government's obligations, as it has in the past.

Infrastructure Negotiators Agree to Framework for Package

WASHINGTON-Members of a bipartisan group negotiating a roughly $1 trillion infrastructure proposal said they had crafted a framework for an agreement, and lawmakers plan to meet with President Biden on Thursday to try to complete a deal.

The Democrats and Republicans emerged from a meeting with top White House officials Wednesday saying work would continue on some unresolved details.

Bank of Korea May Raise Rates This Year, Governor Says

South Korea's central bank is preparing to raise rates this year, as the economy recovers faster than expected.

Bank of Korea Gov. Lee Ju-yeol said Thursday in a clearer-than-ever message that he is thinking of raising rates "within this year," though the exact timing and pace will depend on economic conditions.

Google, Facebook Pressure Falls Short as Antitrust Measures Advance in House Committee

WASHINGTON-A House committee approved far-reaching legislation to curb the market dominance of tech giants, including Alphabet Inc.'s Google and Facebook Inc., but much of the effort faced intensive lobbying by affected firms that slowed the committee's work and foreshadowed a pitched battle in the Senate.

The centerpiece of the six-bill package, a measure to bar big tech companies from favoring their own products in a range of circumstances on their platforms, was approved early Thursday by a vote of 24 to 20. Known as the American Choice and Innovation Online Act, the legislation would prohibit big platforms from engaging in conduct that advantages their own products or services, or disadvantages other business users, or discriminates among similarly situated business users.

Infrastructure Negotiators Agree to Framework for Package

WASHINGTON-Members of a bipartisan group negotiating a roughly $1 trillion infrastructure proposal said they had crafted a framework for an agreement, and lawmakers plan to meet with President Biden on Thursday to try to complete a deal.

The Democrats and Republicans emerged from a meeting with top White House officials Wednesday saying work would continue on some unresolved details.

NASA's Perseverance Rover Is Looking for Life on Mars

NASA's latest Mars rover is done with its testing and is ready to embark upon its first scientific mission. After landing on the planet in February, the Perseverance rover has been busy trying out its many instruments-converting atmospheric carbon dioxide into oxygen that would be needed for manned missions, flying a helicopter and taking photos.

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(END) Dow Jones Newswires

June 24, 2021 06:32 ET (10:32 GMT)

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