UKX FTSE 100 Index

MARKET WRAPS

Stocks:

European stocks rose Thursday as investors digested earnings and ahead of the Bank of England's latest monetary policy decision.

The pan-continental Stoxx Europe 600 rose, but London's FTSE 100 wavered around flat with mining shares among the worst performers.

The Bank of England's latest monetary policy decision, economic forecasts and minutes are due. Investors expect policies to remain on hold and are awaiting signals on when the central bank could begin to pull back on stimulus measures.

"We'll be looking for signs, anything from the BOE that adds to the hawkishness in the developed-market central bank narrative," said Arun Sai, multiasset strategist at Pictet Asset Management. Earlier this week, the Reserve Bank of Australia said it would go ahead with its plan to taper its bond-buying program despite an uptick in Covid-19 cases.

Among European equities, Germany's Siemens rose close to 5% after raising its full-year outlook and reporting revenue that beat analysts' expectations. Bayer slipped over 5% after it posted a net loss and said earnings continued to be affected by litigation costs for its Roundup weedkiller.

In the U.K., miners fell with Anglo American, Rio Tinto and BHP Group falling 1.7%, 1.4% and 1.0% respectively. WPP was the top riser, up 3.1%, after the advertising giant swung to a pre-tax profit for the first half and raised its full-year guidance.

Rolls-Royce shares gain 1.1% after the engine maker said it returned to a pre-tax profit in the first-half. Evraz climbs 0.9% after the steelmaker reported its first-half net profit more than doubled.

U.S. Markets:

Stock futures edged up ahead of new data on the trade deficit and unemployment claims that could provide fresh insights into the pace of the economic recovery.

The major stock indexes have wobbled in recent days amid concerns that the rebound may be slowing and the Delta variant of Covid-19 is leading to a surge in cases. Fresh data Wednesday showed that the private sector added half as many jobs in July as economists expected. Despite the volatility, the S&P 500 is still hovering near its all-time high, boosted by strong quarterly results from the biggest businesses.

"We're pretty positive, we think that the earnings data is very strong," said Caroline Simmons, U.K. chief investment officer at UBS Global Wealth Management. Equity markets can continue to climb by 5% to 10% over the next year, she said.

The continued signs of weakness in the labor market also suggests that the Federal Reserve will hold off on scaling back its easy money policies for now, Ms. Simmons added.

"Unemployment is higher than it was pre-pandemic, and central banks feel there is still excess capacity in the labor market," Ms. Simmons said. "When it comes to it, we believe that monetary tightening will be relatively gradual, well flagged, and actually, equities will probably be able to absorb it."

Pharmaceutical company Moderna, food giant Kellogg and media conglomerate ViacomCBS are slated to report their results ahead of the opening bell. Novavax, Beyond Meat and American International Group are scheduled to post earnings after markets close.

Data on the U.S. trade balance for June is due at 8:30 a.m. ET. Economists expect the trade deficit to have widened after preliminary figures showed record goods imports with Americans buying more from overseas.

Data on jobless claims, seen as a proxy for layoffs, are set to be released at 8:30 a.m. ET. The figures released last week showed a moderate decline in claims, but they remain in a range that is nearly double the pre-pandemic average.

Forex:

The dollar traded flat as investors exercise caution ahead of the release of July's U.S. nonfarm payrolls report on Friday.

"The Federal Reserve has signalled clearly that it wants to see stronger employment growth to encourage it to begin tapering quantitative easing, which makes Friday's nonfarm payrolls report even more important for U.S. dollar direction in the near-term," MUFG Bank currency analyst Lee Hardman said.

ADP private payrolls data trailed expectations on Wednesday, which will have triggered downward revisions to forecasts for Labor Department's nonfarm payrolls report, he said. The DXY dollar index traded flat at 92.2400.

Sterling rose as traders await the Bank of England's policy decision. RBC Capital Markets currency strategist Adam Cole notes that BOE policymaker Michael Saunders and the central bank's Deputy Governor Dave Ramsden recently discussed paring back bond purchases, although it is unlikely a majority will vote for this yet.

"A substantial part of the government's fiscal support is being withdrawn at the end of September and we think risk management considerations mean that there is still a majority in favor of continuing with quantitative easing as planned."

The BOE is likely to vote 6-2 to maintain QE, with Saunders and Ramsden the only outliers, which could be disappointing for some sterling investors, Cole said.

Bonds:

In bond markets, the yield on the benchmark 10-year Treasury note edged up to 1.187% from 1.183% on Wednesday.

A bond market rally that drove yields sharply lower has prompted Pictet Asset Management to take profits on U.S. Treasuries and it has also reduced them to "neutral" from "overweight".

The downward move in bond yields was initiated by signs that the U.S. economic growth had started to peak, Pictet AM says. However, the bond rally was partly technical, helped by an unwinding of short positions, it said.

"With real yields also having hit all-time lows, investors have additional reasons to believe the market is richly valued, particularly at a time when the Fed is seen to be thinking about the first stages of monetary tightening," Pictet AM said.

Commodities:

Oil prices fell after both benchmarks recorded significant losses Wednesday. Those declines have come as market players continue to revise their demand expectations amid the spread of the Delta variant, said DNB Markets' Helge Andre Martinsen.

In addition, Energy Information Administration data showed a surprise large build in U.S. crude inventories, although "the key reason for the unexpected rise in crude inventories was the continued inflated net crude imports level," Martinsen said.

Separately, Saudi Aramco raised its selling prices for the U.S. and Asia but cut them for Europe, demonstrating the speed with which demand expectations for various regions have changed in recent months.

LME three-month copper prices were down 0.4% at $9,432 a metric ton after coming under Delta-variant-related pressure Wednesday along with the rest of the commodities basket.

On top of that, a strengthening U.S. dollar has also put pressure on metals, according to ING's Warren Patterson.

For copper specifically, Chile's output rose 2.3% in June from the same month last year, primarily due to gains at its Codelco mine, although production so far this year is down 1.2% from the same period in 2020.

London gold prices were flat after receiving a boost from weak U.S. jobs numbers.

EMEA HEADLINES

German Manufacturing Orders Rose in June, Beating Expectations Despite Supply Disruptions

German manufacturing orders rose in June more than expected, despite widespread supply shortages.

Manufacturing orders increased 4.1% on month in June in adjusted terms, following a revised 3.2% drop in May, according to data from federal statistics office Destatis released Thursday.

Bayer Shares Tumble After Second-Quarter Loss

Shares in Bayer AG fell in early trading Thursday after the company posted a second-quarter net loss and an outlook on Ebitda before special items which is behind consensus.

At 0815 GMT, Bayer traded 5.2% lower at EUR47.23.

Siemens Raises Forecasts as 3Q Profit, Revenue Beat Expectations

Siemens AG shares gained on Thursday after the company reported a rise in third-quarter profit, revenue that beat expectations and raised its full-year outlook on the back of the global economic recovery.

Shares at 0835 GMT rose 3.8% to EUR143.04.

Siemens to Buy Software Company Sqills

Siemens AG said Thursday that its Siemens Mobility unit plans to acquire software company Sqills for 550 million euros ($651.1 million), plus a performance-based factor.

Sqills, based in the Netherlands, is active in cloud-based inventory management, reservation and ticketing software for public-transport operators.

Glencore Raises Shareholder Returns; Commodity Prices Boosted 1H Profit

Glencore PLC said Thursday that it will increase 2021 shareholder returns to $2.8 billion, as higher commodity prices boosted profit and free cash flow in the first half of the year.

The natural-resources major said that it will pay a $530 million special cash distribution in September--equivalent to $0.04 a share--and launch a $650 million share buyback to be completed by the release of its full-year results next year.

WPP PLC Swung to 1H Pretax Profit; Raises 2021 Guidance

WPP PLC on Thursday reported a swing to pretax profit for the first half of the year and raised its full-year guidance.

The London-based advertising group also said that it will buyback 350 million pounds ($486.1 million) worth of shares in the second half of this year.

Adidas Shares Fall After 2021 Guidance Upgrade

Shares in Adidas AG traded lower on Thursday after the German sporting-goods company raised its targets for sales and profitability for the year, an upgrade that had been expected according to analysts.

At 0832 GMT, Adidas traded 4.2% lower at EUR322.05.

Zalando Shares Slide As 2021 Outlook Disappoints

Shares in Zalando SE dropped in early morning trading as the Berlin-based online retailer reiterated targets for the year at a time when investors were hoping for a meaningful upgrade, analysts said.

At 0830 GMT, Zalando shares traded 8.8% lower at 88.86 euros ($105.20).

Merck KGaA Posts Higher 2Q Earnings, Sales; Raises 2021 Outlook

Merck KGaA on Thursday posted higher earnings and sales for the second quarter and raised its outlook for the full year.

The German pharmaceuticals-and-chemicals company posted after-tax profit of 747 million euros ($884.3 million) for the quarter, compared with EUR289 million in the same period a year earlier, on sales which grew to EUR4.87 billion from EUR4.12 billion in the same quarter of 2020.

Credit Agricole 2Q Net Profit Doubled

Credit Agricole SA's net profit more than doubled in the second quarter supported by lower provisions and positive one-offs.

France's second-largest listed bank by assets said Thursday that net profit for the period was 1.97 billion euros ($2.33 billion) compared with EUR954 million a year earlier.

Iran to Swear In New President as Unease Grows Over Nuclear Deal

For the first time in years, all branches of power in Iran are set to fall under the control of hard-liners when a protégé of the supreme leader is sworn in as president, bolstering their power and adding to growing unease that the Islamic Republic's relations with the West could worsen.

President-elect Ebrahim Raisi, 60 years old, studied as a young man at one of Supreme Leader Ali Khamenei's Islamic seminaries. He also served on a panel that ordered the execution of thousands of political prisoners. Later, he moved up through the ranks to lead Iran's judiciary.

U.S. Faces Growing Pressure to Allow European Travelers

BRUSSELS-The European Union's top official called on the U.S. to reverse its ban on travelers from the bloc, urging the Biden administration to act within weeks to match Europe's opening to Americans.

The comments by European Commission President Ursula von der Leyen, which were published in German media on Wednesday, signal a growing risk that U.S. travelers could again be banned from visiting Europe because of the Covid-19 pandemic.

GLOBAL NEWS

Jobless Claims Have Settled at Elevated Levels After Steady Declines

After a steady decline this spring, worker filings for new unemployment benefits have settled this summer at a level that is nearly double the pre-pandemic average.

The trend, some economists say, could be happening while the labor market continues to recover from the pandemic and be part of a development where claims remain higher because of greater awareness of unemployment insurance programs.

U.S. Trade Deficit Likely Widened in June as Economic Growth Boosted Imports

WASHINGTON-The U.S. trade deficit likely widened to near a record in June as the resurgent American economy drove strong demand for foreign-made goods.

Economists surveyed by The Wall Street Journal expect a Commerce Department report Thursday to show that the deficit in goods and services widened to $74.2 billion in June from $71.2 billion in May. That would put the trade gap just shy of the record $75 billion in March.

Senate Infrastructure Final Vote Expected as Soon as This Weekend

WASHINGTON-The Senate moved through a series of amendments to the roughly $1 trillion infrastructure package on Wednesday, with lawmakers anticipating a vote on final passage of the bill this weekend or early next week.

Since negotiators finished the 2,702-page bill last weekend, lawmakers have considered amendments offered by a mix of Republicans and Democrats to fine-tune elements of the bill. Republicans have pushed for an open-ended amendment process, while Senate Majority Leader Chuck Schumer (D., N.Y.) has called for the chamber to move quickly. Democrats are seeking to approve a budget outline for a $3.5 trillion climate and antipoverty package before the chamber departs for its August recess.

Interest-Rate Increases Could Come as Soon as Early 2023, Fed's Clarida Says

Significant fiscal stimulus this year is speeding the economy's recovery so that the Federal Reserve is able to consider lifting interest rates from near zero by early 2023, said a top central bank official in a speech Wednesday.

Fed Vice Chairman Richard Clarida said he expects that, under his current projections for inflation and employment, "commencing policy normalization in 2023 would...be entirely consistent with our new flexible average inflation targeting framework."

China State Media Outlet Urges Higher Taxes for Gaming Firms Amid Gaming Addiction Concerns

China's gaming companies should step up their social responsibility by paying more taxes, a state-owned media outlet said Thursday, stoking concerns that a regulatory crackdown may be looming.

Securities Times, a newspaper affiliated with Communist Party mouthpiece People's Daily, said that, after years of enjoying government subsidies and tax cuts, the gaming sector should brace for taxation that aligns with that of other industries.

U.S. to Set Electric-Vehicle Sales Target of 50% by 2030

WASHINGTON-Roughly half of all cars and light trucks sold in the U.S. by 2030 would be electric, hydrogen-fuel cell and plug-in hybrid vehicles under voluntary targets set to be announced Thursday by the Biden administration and backed by auto makers, contingent on government support.

In a joint statement, General Motors Co., Ford Motor Co., and Chrysler maker Stellantis NV said their commitment hinges on federal funding for manufacturing and supply-chain research and development, purchase incentives and an EV-charging network.

FDA Weighs Faster Timeline for Approving Pfizer Vaccine

WASHINGTON-U.S. Food and Drug Administration officials, under pressure to swiftly grant full approval to the Pfizer Covid-19 vaccine, are in an intense debate over whether the agency will make the decision this month or stretch the timetable into early or mid-September, according to people familiar with the discussions.

There has been a flurry of internal discussions about that timeline within the agency over the past two days, according to three people familiar with or involved in the talks.

Contractor Says Fired Supreme Court Justice Behind Killing of Haitian President

A Miami-based security contractor who hired Colombian mercenaries accused of killing Haitian President Jovenel Moïse last month said he was working with a former Haitian Supreme Court judge to help arrest Mr. Moïse and not assassinate him.

Antonio Intriago, owner of a South Florida-based firm called CTU Security, said the mercenaries went to the president's private villa to accompany Haitian police executing an arrest warrant for the president, according to a statement released Wednesday by three lawyers representing Mr. Intriago. They said the president was dead when the Colombians arrived, echoing testimony from some of the soldiers.

WHO Calls for Halt to Covid-19 Booster Shots to Tackle Shortfall in Developing World

The World Health Organization called Wednesday for a moratorium on Covid-19 booster shots until at least the end of September to address a shortfall in vaccine supplies to poor countries.

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(END) Dow Jones Newswires

August 05, 2021 06:01 ET (10:01 GMT)

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