European stocks rose as investors continued to balance positive earnings news with concerns about how rising COVID-19 cases might affect the economic recovery.

The monthslong rally in stocks has resumed after markets skidded at the start of the week in response to concerns about the fast-spreading Delta variant.

Investors have drawn comfort from rapid earnings growth at the biggest American companies. Money managers also say governments in the U.S. and Europe are unlikely to bring in lockdowns that restrict growth, even if rising cases take the shine off the economic recovery.

"You have an earnings season that is going tremendously well," said Seema Shah, chief strategist at Principal Global Investors. The economic outlook isn't as strong as it was three months ago, but "the path ahead is not that negative and certainly there is a lot of buying the dip," she added.

Ms. Shah is keeping a close eye on what executives are saying about their ability to pass higher input costs to customers instead of taking the hit in profit margins. The flip side: If many companies succeed in feeding costs through, inflation will take longer to subside, which could prompt concerns about higher interest rates and knock the market.

Technology stocks continued to curry favor with investors, with more positive earnings news late Thursday from Twitter and Snapchat parent Snap.

A strong performance by technology stocks has come amid rising concerns linked to the highly contagious delta variant of coronavirus that is contributing to a spread of COVID-19 cases in the U.S., notably in states that have seen lower vaccinations.

"Investors are unsure what this update means for the economy's recovery in the coming months. Investors should keep in mind that, at the height of the coronavirus pandemic, tech stocks provided a haven for distressed investors due to their higher-than-average earnings performance," said Naeem Aslam, chief market analyst at AvaTrade, in a note to clients.

"Responding with the same strategy, investors are moving away from stocks positively correlated with economic cycles to tech stocks in an attempt to hedge their risk," he said.

Meanwhile, U.K. composite PMI for July, which fell to 57.8 from 62.4 the previous month, signals that the economic recovery has paused amid the rise in Covid-19 infections, said James Smith, developed markets economist at ING.

The survey compiled by IHS Markit is consistent with other high-frequency data of weakened mobility and spending, and there could be more signs of people socializing less in the coming weeks, he said.

ING expects U.K. GDP to expand by 1.5% in 3Q on quarter, though there are downside risks. "There's little doubt that further progress in the recovery really relies on Covid-19 prevalence falling again," Smith said. "It's a reminder that the recovery is likely to be far from smooth, " he said.

U.S. Markets:

Stock futures rose, putting major indexes on track for weekly gains with large technology stocks driving the rally.

American Express, oil-field services firm Schlumberger, NextEra Energy and industrial conglomerate Honeywell International are among the companies due to report earnings before the bell in New York. Of the roughly 110 companies in the S&P 500 that have posted results for the second quarter, 85% have topped analysts' profit forecasts, according to FactSet.

Snap's stock leapt 17% in premarket trading on revenue that more than doubled in the second quarter and the fastest user growth in four years.

Twitter shares rose over 5% in premarket trading after the social-media company reported a 74% increase in revenue in the second quarter compared with a year before. Intel's stock fell 1.8% after Chief Executive Pat Gelsinger said he sees the global semiconductor shortage potentially stretching into 2023.

Survey data on the manufacturing and service sectors, due at 9:45 a.m. ET, will offer fresh cues on the outlook for the economy. Economists say the U.S.'s growth spurt likely peaked in the spring, but still expect a strong expansion to continue into 2022.


Any declines in the dollar will be limited in the near-term as global coronavirus concerns boost demand for safe havens and U.S. business and consumer confidence remain strong, ING said.

"The immediate focus remains on the breakout of the Delta variant particularly in those countries where vaccination rates are low and the only recourse to policymakers is fresh lockdowns," ING analysts said.

This issue is acute in emerging markets so it's no wonder portfolio flows into those regions have gone into reverse and provided support to the dollar, they said.

The European Central Bank's new forward guidance released on Thursday means interest rates will stay lower for longer and the euro will be seen as one of the preferred funding currencies, ING said.

"Certainly there was nothing bullish for the EUR in yesterday's ECB meeting," ING analysts said. The ECB will be pleased that its trade-weighted euro has fallen to lows seen last July, they said.

The ECB on Thursday said interest rates would remain on hold until inflation reaches its 2% target ahead of the end of its projection horizon.

The pound stayed weaker after U.K. purchasing managers' index data came in worse than expected.


In the bond market, the yield on 10-year Treasury notes ticked up to 1.279% from 1.264% Thursday.

Inflation-linked bonds could become more attractive with anticipated inflation-target overshoot in the eurozone in the second half of the year, said Patrick Barbe, head of European investment-grade fixed income at Neuberger Berman.

"We conclude the quarterly ECB forecasts are becoming the key driver of the negative rate policy, which raises some uncertainties as we expect inflation rate to overshoot the ECB's 2% target in 2H," he said.

This reinforces the attractiveness of inflation-linked bonds and should lead to being cautious on long-term bonds, he said. He added that the ECB's policy stability for a longer period should lead to an outperformance of short- to medium-term bonds.

The ECB's reiration that it expects its main interest rate to remain low for a long period of time to spur inflation didn't translare into lower spreads in most rating categories in the euro-denominated corporate bond market, said Commerzbank.

Euro corporate cash spreads widened slightly from higher-rated debt down to down to BB-ratedhigh-yield corporate bonds, with only riskier debt with a high probability of degault--rated at B and CCC--tightening on Thursday, it said.

"By sticking to updating the Forward Guidance, the ECB failed to impress, but it also did not disappoint," said head of corporate credit research Marco Stoeckle.


Oil prices were lower, with both benchmarks having now erased their precipitous drops from earlier in the week.

With reports suggesting that the next OPEC policy meeting will not be until September and the market now appearing to have priced in concerns about the Delta variant, investors will likely return to taking their cues from demand data next week.

Despite worries over Covid-19, DNB Markets's Helge Andre Martinsen points to broader signs of recovery, with scheduled commercial flights continuing to rise and global petroleum inventories continuing to drop.

LME three-month copper prices rose 0.5% to $9,511 a metric ton, rising for a fourth straight day as inventories in LME warehouses continue to drop and the premium paid for the red metal at warehouses in Yangshan continue to rise, according to Marex Spectron's Anna Stablum.

Meanwhile, tin continued its climb, up 1.8% $34,650 a metric ton with "falling inventories, strong regional premiums and tight forward curves all point to a fast uptick in demand in the U.S. and Europe," Ms. Stablum added.

In the precious metals complex, London gold was up, with the U.S. dollar having softened in recent sessions.



Vodafone Shares Rise as Revenue Recovers From Pandemic

Vodafone Group PLC said Friday that its quarterly revenue rebounded from the hit caused by the coronavirus pandemic last year, and that it is on track to meet its expectations for the full year.

Shares in the U.K.-based telecommunications company rose 2.9% in London.


Thales Raises Sales Guidance After 1H Performance Rebounds

Thales SA upgraded its sales forecast for the year after booking rising sales and net profit in its first half as activities rebound from the year before, which was hit by the coronavirus pandemic.

The French aerospace-and-defense company posted net profit for the period of 433 million euros ($510.7 million), up from EUR65 million a year earlier. On an adjusted basis, net income stood at EUR591 million.


Valeo Swung to 1H Net Profit, But Sales Still Lagged 2019

Valeo SA said Thursday that it swung to a small net profit in the first half, as sales rose sharply from the previous-year period but continued to lag the pre-pandemic period.

The French auto supplier made a first-half net profit of 90 million euros ($106.2 million), on sales that rose 31% like-for-like to EUR8.99 billion, in line with analyst views as polled by FactSet. Sales remained below the first half of 2019, however.


Danske Bank Backs Guidance After In-Line 2Q Earnings

Danske Bank AS on Friday backed its full-year outlook after reporting second-quarter net profit in line with company guidance, as earnings were boosted by higher fees and lower loan losses.

The lender made a quarterly net profit of 2.79 billion Danish kroner ($442 million), from DKK2.33 billion last year. The Copenhagen-based bank had previously guided for net profit of around DKK2.8 billion.


Lonza Raises 2021 View; 1H Sales, Core Ebitda Grew

Lonza Group AG said Friday sales and core earnings before interest, taxes, depreciation and amortization grew in the first half despite Covid-19 headwinds, and raised its outlook for the full year.

The Swiss life-sciences company posted sales of 2.54 billion Swiss francs ($2.76 billion) for the period, up from CHF2.24 billion a year earlier.


Vodacom Group 1Q Revenue Grew

Vodacom Group Ltd. said Friday that first-quarter revenue rose as growth in international markets helped to drive service revenue higher.

The South Africa-based telecommunications company said revenue for the three months ended June 30 was 24.78 billion South African rand ($1.69 billion) compared with ZAR22.73 billion for the same period in 2020.


Global Recovery Accelerates, but Delta Variant Clouds Outlook

The global economy is expected to surge over the coming months as Europe begins to catch up with the U.S. and China, but the rapid spread of the Delta variant of Covid-19 could hold back-but not derail-the recovery.

Surveys of businesses from across Europe released Friday recorded the strongest increase in activity for more than two decades. That suggests the continent is set for the kind of growth already being experienced by the U.S.


U.K. Consumer Confidence Rises in July, Beating Expectations

Consumer confidence in the U.K. rose in July, edging ahead of pre-Covid-19 levels, amid the easing of almost all virus-related restrictions in England and despite a rise in infections across the country.

Market-research firm GfK's consumer-confidence indicator came in at minus seven in July, up two points from June. Economists polled by The Wall Street Journal had forecast an unchanged reading at minus nine.


Talking Markets: Europe's Economic Recovery Hopes Are Riding on Unlocking Covid-19 Savings Stockpile

When the pandemic hit Europe, Pablo Jimenez continued working as usual in his job as a computer scientist, albeit remotely. He was living in Madrid at the time but decided to quarantine in his parents' home in Zamora, a smaller city in the west of Spain. He didn't leave the apartment for four months and didn't have many expenditures--his bank account grew steadily.

Since the onset of the Covid-19 pandemic, household savings have surged at an unprecedented rate, fueled by restricted spending opportunities, combined with increased precautionary deposits owing to concerns about unemployment. Economists expect a strong rebound in private consumption thanks to those savings once restrictions are lifted, which should provide a much-needed boost to the economic recovery.



Grills Are the Latest Fad in a Scorching IPO Market

The searing market for newly public companies has a new obsession: grills.

Two leading sellers of outdoor grills and grilling accessories, Weber and Traeger, both filed paperwork for initial public offerings earlier this month, while online grilling-and-outdoor-products retailer BBQGuys on Tuesday agreed to go public by combining with a special-purpose acquisition company. The merger values BBQGuys at about $960 million.


Property Investors Bed Down in the Family Home

Wall Street firms are more eager than ever to buy family homes. If they snap up existing supply rather than help build new dwellings, they risk killing their latest golden goose.

Last week, Blackstone's real-estate investment trust bought a portfolio of apartments for $5.1 billion from insurer American International Group. In June, the investment firm spent $6 billion on Home Partners of America, a company that owns more than 17,000 houses across the U.S. and offers renters an option to buy. Private-equity giant KKR launched a new division that will buy homes to rent them out, Bloomberg reported.


GOP Senators Resist Raising Debt Ceiling as Democrats Push Biden Spending Plans

WASHINGTON-Top Senate Republicans said the GOP may line up against any effort to raise the government's borrowing limit this year, adding to the uncertainty surrounding how Congress will address the issue after the limit is reinstated next month.

Senate Minority Whip John Thune (R., S.D.) said at a press conference Wednesday that Democratic plans to advance President Biden's $4 trillion agenda could prompt Republicans to oppose a debt-limit increase, echoing comments Senate Minority Leader Mitch McConnell (R., Ky.) made earlier to the media outlet Punchbowl News.


Singapore's GIC Sees Green Shoots in Uncertain Global Environment

Singapore's sovereign-wealth fund GIC Private Ltd. remains cautious on uncertainty related to the pandemic and inflation concerns, but sees new growth opportunities emerging in areas including technology, sustainability and the reconfiguration of global supply chains.

GIC said in its annual report Friday that it expects global economic recovery to continue amid fiscal stimulus and monetary-policy support, albeit at different rates and with a wide range of potential outcomes over the medium- and long-term.


Western Wildfires Lift Lumber Prices

Lumber prices finally cooled off. Now come the fires.

Forest fires raging in the West are threatening an important swath of the U.S.'s wood supply, pinching output that has been under pressure since the Covid-19 pandemic touched off home buying and remodeling booms and sent lumber prices soaring.


China Rejects WHO Proposal for Second Phase of Covid-19 Origins Probe

TAIPEI-China rejects the World Health Organization's proposal for a second phase of investigation into Covid-19's origins, including a potential laboratory leak, and has put forward its own proposal to seek evidence in other countries, a top Chinese official said.

WHO chief Tedros Adhanom Ghebreyesus presented member states last week with a plan for further study that would include audits of laboratories and markets in Wuhan, the Chinese city where the first cases were identified. He also called for greater transparency from Beijing.


U.S. Unemployment Benefit Rolls Shrink as States Exit Pandemic Programs

The number of Americans receiving jobless payments fell this month to the lowest level since early in the coronavirus pandemic, but first-time applications rose as supply constraints persist in the auto industry.

Continuing payments made through all unemployment benefit programs fell by 1.3 million in the week ended July 3, to 12.6 million, the Labor Department said Thursday. That was the lowest level since late March 2020, when new programs responding to the pandemic first came online.


Democrats Unify Behind Climate Corps, Vague on Details

A NEW CIVILIAN CLIMATE CORPS has become a central progressive demand for the Democrats' budget reconciliation package, and party leaders seem poised to go along. Climate groups and elected officials alike see it as a combination of several top priorities: a tangible response to climate change, a broad-based jobs program aimed especially at young people and people of color, and a test case for Franklin Delano Roosevelt-style populism that President Biden is so eagerly trying to emulate. Like the Depression-era Civilian Conservation Corps, it would employ Americans on climate-focused public-works projects like reforestation.


Tokyo Olympics Opening Ceremony to Skip Usual Razzle-Dazzle

TOKYO-The opening ceremony of the Olympics on Friday is set to look and feel very different from the bustling celebrations that opened previous Games, with no crowd, no special effects and no stadium-wide synchronized dancing.

Only about half the athletes competing at the Games will be there.


Companies Face Growing Legal Risks Over Ransomware Data Leaks

A cancer patient in Ireland is suing a hospital in Cork after his data was exposed online following a ransomware attack on the country's healthcare system. The suit reflects the legal and financial risks for organizations hit in such cyberattacks.

Legal fallout from ransomware attacks heightens the pain that victim organizations experience after potentially suffering interruptions to business, losing access to data and taking a reputational hit, according to experts. In addition, some companies suffer financial losses and might pay hackers a ransom fee and face regulatory fines for privacy and security violations.


U.S. Vaccine Panel Signals Preliminary Support for Covid-19 Booster Shots

A panel of health experts advising the U.S. government on vaccines expressed preliminary support for giving Covid-19 boosters to immunocompromised people, but said they were waiting for regulatory action before making a formal recommendation.

A work group of the Advisory Committee on Immunization Practices panel also on Thursday endorsed the continued use of J&J's vaccine, despite a recent warning about a low risk of a rare neurological disorder among people taking the shot.


New Zealand Halts Quarantine-Free Travel With Australia for Eight Weeks

WELLINGTON, New Zealand-New Zealand will halt quarantine-free travel with Australia for eight weeks because of increased risks from the Covid-19 Delta variant, Prime Minister Jacinda Ardern said Friday.

The travel bubble with Australia was already halted with New South Wales, Victoria and South Australia states, which are battling outbreaks of the virus and together make up about two-thirds of Australia's population.


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(END) Dow Jones Newswires

July 23, 2021 06:38 ET (10:38 GMT)

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