MARKET WRAPS

Watch For:

EU Unemployment; EU Flash Estimate euro area inflation; EU Preliminary Flash Estimate GDP; EU bank stress test results published; updates from IAG, Renault, Hermes, EssilorLuxottica, Air France-KLM, BNP Paribas, Eni, Swiss Re, Unicredit, Pearson, NatWest.

Opening Call:

European stocks could open lower. Dollar weakens. Long-term Treasury yields rose. Oil down and gold is flat.

Equities:

European stocks are set to open lower Friday after major U.S. stock indexes rose Thursday, despite new data suggesting the economic recovery has started to slow.

The market gains followed data showing gross domestic product grew by 6.5% on an annualized basis in the second quarter, up slightly from earlier in the year. Meanwhile, jobless claims, a proxy for layoffs, came in at 400,000, resuming their downward trajectory.

Both figures missed Wall Street expectations, though investors largely shrugged off the disappointment.

Matt Peron, director of research at asset management firm Janus Henderson Investors, said that data deep in the GDP report, such as consumer spending, was strong, suggesting the economic recovery remains intact despite recent concerns about the Delta variant of Covid-19.

"Consumer spending surged, while the negatives in the report were from inventory drawdown, presumably from supply shortages," said Mr. Peron. "This implies that the economy, and hence earnings which have also been very strong so far for [the second quarter], will continue for some time."

Many investors seemed to agree with the take. Stocks rose most of Thursday's session, with the Dow and the S&P 500 briefly flirting with new records before slipping from their session highs.

"Most companies are in a pretty positive situation. They have cash, they have demand. It's something that was a bit expected already from last quarter, but we're still having positive surprises," said Ludovic Subran, chief economist at Allianz.

Some U.S.-listed Chinese tech stocks recovered from recent losses after the Chinese government sought to reassure global banks and investors about the recent volatility in markets, saying that Beijing would consider the market impact of future policies.

In Asia, Chinese stocks fell in morning trade, dragged by consumer-related sectors. Sentiment has been affected by social reforms and regulatory actions that have exceeded expectations, Ping An Securities said, adding that the market may be entering an adjustment phase but remains supported overall.

Forex:

The WSJ U.S. Dollar Index slid for the fourth consecutive day, losing 0.4%, and the USD weakened against major currencies as economic recovery looks less strong than previously thought.

The Commerce Department reports annual 2Q GDP growth of 6.5%, slower than the 8.4% growth expected in a WSJ survey of economists. "US GDP data for Q2 below expectations means that the Fed would not have to rush with the tapering," Carlo Alberto De Casa, from Kinesis, told WSJ.

"The reaction on the FX market was a continuation of the bearish movement seen in the last 24 hours on the greenback," he said.

The dollar will be more sensitive to U.S. jobs data after Federal Reserve Chair Jerome Powell said the labor market still had "ground to cover" before the central bank started reducing stimulus, FXTM said.

"Given how this will drive [asset purchase] taper discussions and rate-hike expectations, we could be in for some bumpy months and increased dollar volatility," FXTM analyst Lukman Otunuga said.

In a press conference after the Fed's policy announcement on Wednesday, Powell said: "I think we're some way away from having had substantial further progress toward the maximum employment goal."

Bonds:

Long-term Treasury yields rose on economic data showing strong recovery, although not as much as expected. The 10-year yield is at 1.268%, after reaching 1.289% shortly after the economic data release.

An expected boom in USD-denominated green bonds may close the gap with Europe, which accounts for some 60% of the worldwide issuance of green bonds, Robeco said.

The sustainable investment firm says green bond issuance in the U.S. has already topped $65 billion in the first half of this year and is set to surpass 2020's record of $95 billion. Luxembourg-based Quintet Private Bank--owned by the Al-Thani family of Qatar--has pledged an initial $125 million to Robeco's green bond strategy to invest in the U.S. green bond market.

The Bank of England is expected to declare that negative interest rates are part of the monetary policy toolbox at its Aug. 5 meeting, Societe Generale said.

"The minutes [of the meeting] should report that all necessary adjustments have now been completed by the bank and the banking industry to make a negative bank rate feasible," SocGen economist Brian Hilliard said.

However, bank officials are likely to "repeat that this should not be taken as a signal that this tool will soon be used," he said.

Energy:

Oil fell in morning Asia trade as pandemic restrictions in the region could weigh on demand. Traffic is substantially below normal in big cities such as Kuala Lumpur, Bangkok, Jakarta and Singapore as the spread of Covid-19 is battled, ANZ said.

Metals:

Gold was mostly flat alongside expectations that the Federal Reserve won't abandon its accommodative monetary policies anytime soon, Oanda said, pointing to U.S. economic data that fell short of its expectations.

"A downside surprise in both GDP and jobless claims justifies the Fed's dovish stance," it said. "That should provide a short-term bullish environment for bullion."

Oanda said that if gold can exceed the $1,850/oz resistance level, technical buying could support a strong rally back towards the $1,900/oz.

Iron ore was lower in Asian trade, extending losses from the previous day on continuing efforts by Chinese regulators to cut steel production over environmental concerns, according to ANZ. Beijing's latest target is the country's real estate industry, which consumes 30% of all steel in China, the bank says.

At least five cities have been asked to "stabilize their property markets by stronger regulation," it said. Should real estate markets cool, the need for steel and iron ore would then fall as construction wanes. The most-traded September iron ore contract on the Dalian Commodity Exchange fell 4.8% to CNY1,064.5 a ton.

TODAY'S TOP HEADLINES

U.S. Import Surge Overwhelms Warehouse Space Near Ports

Surging demand for warehousing close to major ports driven by the growth of e-commerce and the flood of container imports hitting U.S. shores is making storage space harder to find and more expensive, adding new stresses to already strained supply chains.

Logistics service providers and real-estate firms say competition for warehouses close to ports such as those in Southern California and New York City is intense, pushing up rents and forcing companies to look to neighboring regions to serve shippers' needs.

Robinhood's Stock Price Falls After IPO

Robinhood Markets Inc., the trading app synonymous with hot stocks, got a cold reception from investors in its own stock-market debut.

The investing app tumbled in its highly anticipated trading debut Thursday, closing 8.4% below its initial public offering price. Robinhood stock opened at $38, matching the IPO price, and quickly fell more than 10%. The stock later climbed to approach the IPO price before falling again in the final hour of trading to close at $34.82.

Credit Suisse Failed to Act on Archegos Risks, Report Says

Credit Suisse Group AG knew Archegos Capital Management was a massive risk and didn't take actions to fix it, according to an investigation the bank commissioned into the collapse of the family investment firm.

The report released Thursday, prepared by a law firm for Credit Suisse, detailed how the bank for years granted Archegos special dispensation to avoid rules meant to protect the bank. It also ignored staff warnings before the family investment firm's collapse.

Didi Global Considers Going Private to Placate China and Compensate Investors

HONG KONG-Ride-hailing giant Didi Global Inc. is considering going private in order to placate authorities in China and compensate investors for losses incurred since the company listed in the U.S. in late June, according to people familiar with the matter.

The Beijing-headquartered company has been in discussions with bankers, regulators and key investors about how it could resolve some of the problems that emerged after Didi listed on the New York Stock Exchange on June 30, the people said. A take-private deal that would involve a tender offer for its publicly traded shares is one of the preliminary options being considered, they added.

The U.S. Economy's Prospects Looked Bright, Until the Delta Variant Surged

The U.S. economy grew rapidly in the second quarter and exceeded its pre-pandemic size, but the outlook has suddenly turned cloudier due to the fast-spreading Delta coronavirus variant.

Virus cases are rising again, particularly in parts of the country where vaccination rates remain low. The Centers for Disease Control and Prevention this week recommended that vaccinated people resume masking indoors in places with high or substantial transmission of coronavirus, leading some local governments and businesses to reinstate restrictions on activity.

Jobless Claims Resumed Decline Last Week

Workers' filings for new unemployment benefits resumed their decline last week and remain near a pandemic low as the labor market continues to recover from the pandemic, economists say.

New jobless claims dropped slightly to 400,000 for the week ended July 24 from a revised 424,000 the week before, the Labor Department reported Thursday. The four-week moving average, which smooths out volatility in the weekly figures, edged higher to 394,500.

Startup Medical-Device Acquisitions Picked Up in First Half of Year

Medical-technology companies are buying more startups as the industry recovers from disruptions to healthcare procedures triggered by the global pandemic last year.

Fourteen venture-backed medical-device companies were acquired in the first half of 2021, nearly as many as the 16 that were sold in all of 2020, according to global data from Silicon Valley Bank.

Climate-Conscious Banks Stick With Distressed Polluters

Goldman Sachs Group Inc. and JPMorgan Chase & Co. have lofty environmental goals but find themselves stuck in bets on two less-than-green energy companies.

The banks are confronting the need to protect investments in troubled energy companies while also living up to commitments to sustainability in their environmental, social and governance policies.

China Tech Stocks Rebound, but Investors Remain Cautious

Chinese technology shares recouped some of their recent steep losses Thursday, after the country's authorities swung into damage-control mode, but investors remain wary about how heightened regulatory pressure might crimp future corporate profits.

On Wednesday, Chinese state media talked up local stocks, while a top regulator privately told global financial firms that Beijing will consider the market impact before introducing future policies, according to people familiar with the matter.

Bayer Plans for Roundup Litigation Claims Rising by $4.5 Billion

Bayer AG sees expenses from lawsuits accusing its Roundup weedkiller of causing cancer potentially rising by $4.5 billion-significantly more than it had previously planned for.

The company will set aside the additional funds to cover Roundup claims in its next quarterly financial report, Bayer executives said Thursday. The new provisions would raise Bayer's funds earmarked for the claims to more than $16 billion from the $11.6 billion the company had previously said it would pay to resolve the cases.

EU Overtakes U.S. in Covid-19 Vaccines as Delta Variant Spreads

MILAN-The European Union passed the U.S. in Covid-19 vaccinations, with the continent inoculating people at a sustained pace and America struggling to persuade vaccine holdouts to get a shot to slow the spread of the Delta variant.

The EU has given at least one vaccine shot to 259 million people, or 58.3% of the total population of its 27 member countries as of Thursday, according to figures compiled by Our World in Data, an Oxford University project tracking the global vaccine rollout. The U.S. has reached 56.7% of its population, equivalent to 189 million people.

U.K. Shop Vacancies Rise for Third Consecutive Year

The second quarter marked the third year in a row of increasing vacancy rates at U.K. shops and this trend is set to continue, according to the latest report by Local Data Company and the British Retail Consortium.

Perpetuating a trend started in the first quarter of 2018, the vacancy rate in the second quarter of 2021 rose to 14.5% from 14.1% in the first quarter of the year, the report found. This means that one in seven British shops is unoccupied.

Israel to Offer Pfizer Booster Shots to Elderly as Delta Cases Rise

TEL AVIV-Israel authorized the use of a booster shot of Pfizer Inc.'s Covid-19 vaccine for people aged 60 and over starting Sunday, after early data in the country suggested vaccine protection against severe illness has waned.

Healthcare providers said Thursday a third dose would be offered to those in that age group at least five months after their second shot.

FDA Lets Pharmacies Substitute Branded Insulin With Knockoff Product, in First for a Biologic Drug

For the first time, U.S. regulators have said that a knockoff version of a biologic drug is interchangeable with its branded equivalent, a milestone in the yearslong effort to bring greater competition to the market for expensive biologic drugs.

The U.S. Food and Drug Administration on Wednesday said the biosimilar insulin product Semglee is interchangeable with Sanofi SA's Lantus, a designation that allows pharmacists to automatically substitute Semglee for prescriptions for Lantus, one of the top-selling insulins in the world.

Tunisia, Sole Survivor of Arab Spring, Risks Sliding Back to Autocratic Rule

Tunisia, the country whose protest movement promised to transform the Middle East a decade ago, is in turmoil after its president suspended parliament and seized executive power this week, stirring concerns that the only democracy to emerge from the Arab Spring uprisings is slipping back to autocracy.

The crisis is threatening to strike a blow against democratic aspirations across the region, and while many Tunisians support the removal of an unpopular government, others fear the country could lose its status as North Africa's sole exemplar of democracy after street rallies overthrew a dictator in 2011. Egypt's brief period of democracy ended in a military coup in 2013. Libya, Syria, and Yemen plunged into war.

China Telecom Plans Shanghai Listing

China Telecom Corp. is moving to sell billions of dollars worth of shares in Shanghai as the telecom carrier turns to its home market for funds.

The company said in a prospectus Friday that it will issue up to 10.40 billion shares. That implies a deal size of nearly US$4.16 billion based on the stock's closing price in Hong Kong on Thursday.

Robinhood's Stock Price Falls After IPO

Robinhood Markets Inc., the trading app synonymous with hot stocks, got a cold reception from investors in its own stock-market debut.

The investing app tumbled in its highly anticipated trading debut Thursday, closing 8.4% below its initial public offering price. Robinhood stock opened at $38, matching the IPO price, and quickly fell more than 10%. The stock later climbed to approach the IPO price before falling again in the final hour of trading to close at $34.82.

Write to sarka.halas@wsj.com

Expected Major Events for Friday

04:30/NED: Jun PPI

04:30/NED: Jun Retail turnover

05:30/FRA: Jun Household consumption expenditure in manufactured goods

05:30/FRA: 2Q GDP - first estimate

06:00/DEN: Jun Unemployment

06:45/FRA: Jul Provisional CPI

07:00/SPN: Jun Retail Sales

07:00/TUR: Jun Foreign Trade

07:00/SWI: Jul KOF economic barometer

07:00/AUT: 2Q Flash Estimate GDP

07:00/ITA: Jun Unemployment

07:00/SPN: 2Q Preliminary GDP

07:00/CZE: 2Q GDP preliminary estimate

08:00/BUL: Jun PPI

08:00/GER: 2Q GDP - 1st release

08:00/ITA: 2Q GDP preliminary estimate

08:30/UK: 2Q Insolvency statistics

08:30/POR: 2Q Flash Estimate GDP

09:00/GRE: Jun PPI

09:00/CRO: Jun Retail trade

09:00/EU: Jun Unemployment

09:00/CYP: Jun PPI

09:00/GRE: May Turnover Index in Retail Trade

09:00/EU: Jul Flash Estimate euro area inflation

09:00/EU: 2Q Preliminary Flash Estimate GDP

09:00/ITA: Jul Cities CPI

09:00/ITA: Jul Provisional CPI

16:59/SPN: Jun Budget deficit

16:59/BEL: Jun PPI

16:59/SPN: May Monthly Balance of Payments

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(END) Dow Jones Newswires

July 30, 2021 00:17 ET (04:17 GMT)

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