European shares jumped early Tuesday, helped by the positive
sentiment in global markets.
Financial stocks gained, as investors factored in the
possibility the Federal Reserve might be forced to back away from
aggressively tighter monetary policy.
"Risk-on sentiment has lifted global markets, with Asia rallying
and momentum carrying forward to the European session," Interactive
Growing warnings about a potential U.S. recession have been
accompanied by renewed chatter about the possibility of a Fed
pivot, suggesting a risk that investors are "again underestimating
the Fed's resolve as it seeks to tackle inflation," said Deutsche
Stocks to Watch:
Unhelpful read across from Nike's first-quarter results last
week couldn't come at a worse time for Adidas, Hauck &
Nike booked decent sales growth for the first quarter of its
fiscal year but operating profit declined on year and inventory
leapt amid supply-chain volatility.
Excess stock will mean intensified promotional activity ahead,
weighing on Adidas's own margins, H&A said, noting that the
timing couldn't be worse as the sector faces a depressed consumer
environment in the coming months and into next year.
H&A has cut estimates for Adidas, kept its sell rating but
trimmed the target price to EUR95 from EUR120.
S&P said in its latest forecast that U.K. GDP is expected to
contract by 0.5% next year.
"As inflation rises further over the winter, consumer spending
is set to contract, leading the broader U.K. economy into a
moderate technical recession."
S&P said GDP is expected to grow by 1.4% in 2024 and 1.6% in
"Growth in the latter years will, albeit to a limited extent,
benefit from the recently announced medium and longer-term fiscal
policies aimed at boosting the U.K. economy's growth
Stock futures rose sharply, suggesting the major indexes could
extend Monday's strong rally.
Treasury bonds also gained, pushing the yield on the benchmark
10-year note down to 3.595% from 3.650%
Read: 10-Year Treasury Yield Likely Peaked, Charts Show
Stocks to Watch: Tesla's stock climbed 3% premarket, clawing
back some of Monday's losses that came after its disappointing data
Cathie Wood's ARK funds said it had snapped up Tesla stock after
the EV maker's shares tumbled.
Read more here.
The dollar extended its recent correction lower as Treasury
yields declined due to growing expectations that the end may be in
sight for U.S. rate increases.
"The pullback for U.S. yields and dollar appears to reflect in
part that market participants have become more comfortable that the
Federal Reserve is moving closer to the end of their rate hike
cycle," MUFG Bank said.
Market expectations for the Fed's peak rate in 2023 have fallen
to around 4.39% from 4.75%, MUFG said.
Sterling extended its advance after the U.K. government reversed
plans to scrap the top rate of income tax, but ING said the
currency remains vulnerable due to a lack of political credibility
and a still-elevated risk of a rating downgrade.
"The pound continues to face very significant downside risks as
the large twin deficit, low market confidence in the new government
and a grim outlook for Europe heading into winter all point to the
unsustainability of 1.10+ levels in GBP/USD," ING said.
The small amount of gilts bought by the Bank of England under
the program it initiated last week to address instability in the
bond market may be a sign that the central bank senses the market
stress easing, KBC Bank said.
Over the four days since the start of the program, the BOE
bought GBP3.66 billion of a potential maximum GBP20 billion, KBC
The BOE probably also avoids too much interference of current
buying with its overall policy stance, KBC said. The BOE is set to
buy long-dated gilts until Oct. 14.
Citi said that following the recent sell-off, 10-year gilts
offer a 96-basis-point pickup over Treasurys for U.S. investors
when FX-hedged for three months, adding that this is the largest
pickup in at least seven years and the best return for U.S.
investors within major developed markets except for eurozone
The yield pickup in the 30-year maturity segment is around
70bps, still relatively attractive, Citi said. However, for
investors over a one-year horizon, the FX-hedging cost associated
with gilts becomes highly punitive for dollar-denominated
Oil prices extended their modest gains as investors awaited
Wednesday's OPEC meeting and likely output cut.
"Emboldened by the thought of a convincing OPEC backstop, a
soggy dollar and a softer rate profile helping growth recover, oil
prices continued to march higher...ahead of tomorrow's anticipated
OPEC production cut," SPI Asset Management said.
Base metals pushed higher on improving macroeconomic sentiment
across risk assets.
"The macro mood feels better this morning and a few market
indicators are now flashing green," Peak Trading Research said.
Employment data on Friday will further help determine how risk
assets move, Peak added.
UBS said commodity demand could slow over the coming six months
as consumers in developed markets are squeezed by high energy costs
and rising rates while in China, pandemic-related restrictions are
likely to stifle growth and the property market should remain
The outlook for commodity supply is more mixed, it said, and
tipped rising production of copper, iron ore and platinum group
metals but expected aluminum, zinc, gas and coal markets to
continue facing disruptions.
For investors, thermal coal and gas should be top picks because
supply disruptions are likely to support prices for two-to-three
years, UBS said.
"We also remain constructive on lithium."
DOW JONES NEWSPLUS
Concerns About Credit Suisse Mount After Debt Slide
Credit Suisse Group AG came under renewed pressure over its
financial health after the value of its riskiest bonds sank and the
cost to insure against default rose sharply.
Investors and analysts called on the Swiss banking giant, which
combines a Wall Street presence with a global specialty in managing
rich people's money, to move faster with cost savings and fresh
investor capital to reassure markets.
Atlantia $12.5B Buy-Out Bid Launched After Getting Final Green
U.S. fund Blackstone Inc. and Italy's Benetton family have
officially launched their takeover offer for Atlantia SpA after
receiving the go-ahead from the Italian market watchdog, they said
The offer for the operator of toll roads and airports is for a
maximum 552.4 million shares, or 66.9% of the company's share
capital, at 23 euros a share, according to Schema SpA, Blackstone
and the Benettons' investment vehicle. This implies a maximum offer
value of up to around EUR12.7 billion ($12.5 billion) giving
Atlantia an equity value of around EUR19 billion.
Sika Raises 2022 Sales Guidance
Sika AG on Tuesday raised its guidance for sales for 2022 and
confirmed the strategic fit of its planned acquisition of MBCC
Group ahead of its Capital Markets Day.
The Swiss building-products company said it expects sales in
local currencies to rise by over 15% for 2022, with an
over-proportional increase in earnings before interest and
Legal & General Backs 2022 Operating Profit; Capital
Generation Despite Volatility
Legal & General Group PLC said Tuesday that it continues to
benefit from positive momentum in the second half, despite the
increased market volatility, and backed its guidance for the
full-year operating profit and capital generation.
The FTSE 100-listed insurance company said that it expects to
deliver 2022 operating profit growth in line with the 8% growth
delivered in the first half, while capital generation is forecast
to come in at 1.8 billion pounds ($2.04 billion).
ProSiebenSat.1 Media CEO Rainer Beaujean to Step Down, Bert
Habets to Take Over
ProSiebenSat.1 Media SE said that the current Group Chief
Executive Officer Rainer Beaujean has resigned and that he will be
succeeded as CEO by Bert Habets.
The German broadcaster said Mr. Beaujean has resigned by mutual
agreement with the Supervisory Board. Mr. Habets, who will take
over in November, has been involved as a member of the Supervisory
Board since May 2022, the company said on Monday.
French Prosecutors Open Corruption Probe Into Top Macron
PARIS-A top aide to French President Emmanuel Macron was placed
under formal investigation for allegedly violating
conflict-of-interest laws involving his family ties to a
Swiss-Italian shipping company that fell under his purview while he
was a senior finance official.
Prosecutors say they opened the probe after anticorruption group
Anticor filed a complaint targeting Alexis Kohler, Mr. Macron's
chief of staff. Anticor alleges that Mr. Kohler failed to disclose
his relationship with Mediterranean Shipping Co., which is owned by
a relative, and helped defend the company's interests when he
worked for the APE state holding agency between 2010 and 2012, a
spokeswoman for the group said.
Ukraine Pushes South Into Strategic Kherson Region
KHARKIV, Ukraine-Ukrainian forces broke through Russian lines
and made new advances in the southern Kherson region, while
expanding their rapid offensive in the eastern part of the country,
retaking areas that Moscow now claims to be part of Russia.
Pushing some 20 miles south in Kherson, the new Ukrainian
advance secured a corner of the only Russian foothold on the
western bank of the Dnipro River, which bisects the country.
Ukraine has in recent months destroyed all the bridges to that
enclave, which includes the regional capital, Kherson, making it
increasingly difficult for the large Russian military contingent
there to be resupplied with fuel, ammunition and food.
Russia's Lower House Approves Absorbing Ukrainian
MOSCOW-Russian lawmakers moved forward with formalizing the
absorption into Russia of occupied Ukrainian territories on Monday
despite mounting battlefield setbacks and a lack of control over
the regions they voted to incorporate.
Deputies in the State Duma, Russia's lower house of parliament,
unanimously approved bringing Russian-controlled Luhansk and areas
of Donetsk, Kherson and Zaporizhzhia under Moscow's control,
increasing to 89 the number of Russian constituent territories.
London Heathrow to Drop Daily Passenger Cap After Chaotic
LONDON-London Heathrow Airport has told airlines it will lift a
cap on passenger numbers at its terminals later this month,
according to people familiar with the decision, ending one of the
most extraordinary measures the aviation industry put in place this
summer to deal with a surge in travel and a shortage of
The cap, which limits daily departing passengers from its
terminals to 100,000 a day, won't continue beyond Oct. 29 when the
official summer flying season ends, people briefed on the matter
U.S. Seeks to Further Restrict Cutting-Edge Chip Exports to
The Biden administration is preparing new export controls on
semiconductors and the machines to make them, the latest push in
its effort to deny China the ability to make the fastest, most
cutting-edge circuitry possible, according to people familiar with
The administration in recent weeks has already placed new
restrictions on some U.S. exports of chips used for
artificial-intelligence calculations and manufacturing equipment
used to make some of the most powerful number-crunching chips.
Crypto Could Threaten Financial System, Federal Risk Panel
WASHINGTON-Risks tied to cryptocurrencies could grow rapidly and
eventually threaten the broader financial system, a panel of senior
U.S. officials warned Monday, calling for tougher oversight of
The Financial Stability Oversight Council, chaired by Treasury
Secretary Janet Yellen, said the crypto industry remains small
compared with the overall financial system, but that could change
quickly and exacerbate potential systemic risks.
RBA Slows Pace of Rate Increases as Household Budgets
SYDNEY-The Reserve Bank of Australia slowed the pace of recent
interest-rate increases at a policy meeting Tuesday, citing a
deterioration in the global economic outlook and growing concern
about tightening household budgets.
The RBA raised the official cash rate by 25 basis points to
2.60%, surprising most economists who expected a further
Top Fed Official Warns of More Persistent Price Pressures
Despite some signs of easing inflation, underlying price
pressures have too much momentum and will likely require a period
of higher interest rates, a top Federal Reserve official said
The economy is already seeing some of the effects of the Fed's
efforts to slow demand, including higher borrowing costs and
mortgage rates and falling stock prices, which "have become
significantly less supportive of spending," said New York Fed
President John Williams in remarks prepared for delivery
U.N. Calls On Fed, Other Central Banks to Halt Interest-Rate
The Federal Reserve and other central banks risk pushing the
global economy into recession followed by prolonged stagnation if
they keep raising interest rates, a United Nations agency said
The warning comes amid growing unease about the haste with which
the Fed and its counterparts are raising borrowing costs to contain
surging inflation. India's central bank Friday said that the global
economy was facing a third major shock after the Covid-19 pandemic
and Russia's invasion of Ukraine, in the form of aggressive rate
increases by central banks in rich countries.
North Korea Launches Missile Over Japan
SEOUL-North Korea flew a missile over Japan for the first time
since 2017, Seoul and Tokyo officials said, a significant
escalation that led to Japan issuing warnings for citizens to take
A single intermediate-range missile was launched at 7:23 a.m.
local time from the North's Chagang Province, bordering China,
South Korea's military said. The missile flew about 2,800 miles,
hitting an altitude of roughly 603 miles, according to Japanese and
South Korean assessments.
Trump Files Defamation Lawsuit Against CNN, Seeking $475
Former President Donald Trump filed a defamation lawsuit Monday
against CNN, accusing the network of engaging in a smear campaign
against him in the lead-up to the 2024 presidential race.
Mr. Trump's suit, filed in a federal court in southern Florida,
alleged CNN has sought to use its influence with viewers to spread
false claims about him for the purpose of defeating him
politically. He accused CNN of associating him with Adolf Hitler
and portraying him as a Russian lackey and a racist. The network,
he alleged, has been escalating these efforts recently in the
expectation that he may run for president again in 2024.
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(END) Dow Jones Newswires
October 04, 2022 05:31 ET (09:31 GMT)
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