Germany manufacturing orders; ECB Economic Bulletin; U.K. CIPS /
Markit Construction PMI; Bank of England Monetary Policy Report,
interest rate decision, and MPC meeting minutes; updates from
ProSiebenSat.1 Media, Bayer, Continental, Deutsche Lufthansa,
Merck, Beiersdorf, adidas, Siemens, Rheinmetall, Zalando, AXA,
Credit Agricole, Pirelli & Co, Banca Monte dei Paschi di Siena,
Adecco, Swisscom, Glencore, Meggitt, Rolls-Royce, WPP.
Stocks could open slightly higher. Dollar rises, sterling could
be little moved by BOE later. Oil gains, and gold remains flat.
European stocks are set to edge higher Thursday as traders
awaited more guidance on the U.S. economic recovery.
U.S. stocks mostly fell Wednesday on concerns that the pandemic
recovery might be faltering as cases related to the Delta variant
of the coronavirus surge and new economic data showed that the
private sector added fewer jobs than economists expected in
A report from ADP showed that 330,000 jobs were added by the
private sector in July, almost half the number that economists were
expecting. Bottlenecks in hiring continue to hold back the labor
market, according to ADP. Federal Reserve policy makers have said
the recovery of the labor market is a key factor in monetary policy
Stocks have ground higher this week amid strong earnings reports
and signs that the economic rebound remains under way, albeit at a
slower pace than in recent months. But the spread of the Delta
variant of Covid-19 and a slowdown in the rate of vaccinations is
prompting some concern that authorities may reimpose or tighten
restrictions on social activity and travel.
"I think the market is going to continue to move higher, but a
caveat is that the pace has been unbelievable," said Larry Adam,
chief investment officer at Raymond James. "We're not likely to see
those kinds of returns going forward. I think we're entering an
environment where the pace of returns is going to slow."
In Asia, stocks were mixed, concerns have been mounting around
the coronavirus delta variant's spread in China, which is on high
alert as it confronts hundreds of fresh cases.
China has sealed off residential communities, suspended flights
and trains, and ordered mass coronavirus testing in Wuhan, the city
where the disease was first detected in late 2019. Although China's
numbers are small compared to outbreaks elsewhere, its containment
strategies and the subsequent impact on its large economy are being
In corporate news, SSE gained 3.4% Wednesday afternoon after a
report claimed a major activist investor was said to be building a
stake in the power generator.
Financial website Betaville cited unidentified sources as saying
the unnamed activist shareholder has been accumulating a "sizeable
shareholding" in SSE in the last few weeks and may soon announce
Betaville said it wasn't clear why the activist was targeting
SSE, but that the move is likely to trigger speculation that the
company could be a takeover target for a European rival.
An SSE spokesman wasn't immediately able to comment. The rumor
comes amid rising takeover interest in U.K. companies whose
valuations have fallen amid uncertainty caused by the coronavirus
pandemic and the U.K.'s EU exit.
The WSJ Dollar Index rose 0.2% to break a two-day losing streak
as the U.S. dollar strengthened 0.2% against the euro and the
pound, and 0.4% against the yen.
Fears of sanitary measures to contain the spread of the Delta
variant have fueled predictions of longer monetary easing, possibly
weakening the US currency.
On the other hand, a faster recovery in the US than in other
developed nations is a boost to the dollar. Capital Economics sees
upside risks to its forecasts of a 4% stronger dollar by the end of
2022, including a more hawkish Fed and even global economic
concerns causing a flight to safety.
Capital Economics expects the trade-weighted dollar to
strengthen 4% by the end of 2022 as the U.S. economy outperforms
and the Federal Reserve gradually reduces stimulus but says a more
significant 10% appreciation is possible.
One potential scenario that could drive the dollar higher than
expected is if the Fed tightens policy even as other central banks
either loosen or keep policies unchanged, Capital Economics
economist Jonas Goltermann said.
A period of heightened economic uncertainty would also provide a
boost to the safe haven dollar, he said.
"On balance, while we continue to forecast a moderately stronger
dollar, we think that the probability of a more significant dollar
rally has arguably increased."
Sterling will be little moved by the Bank of England policy
decision as a meaningful shift in the central bank's accommodative
stance looks unlikely, TD Securities said.
"The tone of the meeting could signal hawkishness down the road,
but any notable shifts might have to wait until the labor market
furlough program has run its course," TD forex strategists said in
A potential upgrade to the BOE's inflation forecast may give the
pound some "positive traction" but "we don't want to overstate the
case," they said.
Risk appetite will remain the key driver of sterling for now,
In bond markets Wednesday, the yield on the benchmark 10-year
Treasury note rose to 1.183%, the largest one-day yield gain in
nearly a week.
U.K. gilt yields followed U.S. Treasury Yields lower after data
showed U.S. private payrolls for July missed market forecasts by a
large margin, clouding the economic outlook.
The 10-year Treasury yield plunged to almost a six-month low of
0.131%, according to Tradeweb, dragging the 10-year gilt yield to a
10-day low of 0.486%.
Oil inched higher in early Asian trade, after declining
overnight following EIA data that showed an unexpected rise in U.S.
crude inventories. Demand concerns, particularly in Asia, could
weigh on oil in the near-term. China, which is one of the world's
largest importers, is seeing a rise in the number of Covid-19 Delta
variant cases, CBA said.
Nearly half of China's 32 provinces are battling the Covid-19
outbreak that originated in Nanjing, it noted.
Gold was little changed in Asian trading, after rising overnight
on U.S. data that showed a weaker-than-expected increase in the
number of private-sector payrolls in July but a record pace of
service sector expansion.
The precious metal also pared earlier gains following some
hawkish comments from the U.S. Fed, ANZ said. Vice Chair Richard
Clarida said the central bank is on course to rein in its easy
monetary policy later this year with some paring of its bond
purchase. "This sets up an interesting phase as the market awaits
the U.S. payrolls data on Friday, " it said.
Copper rose in early Asian trade, snapping a four-day losing
streak as potential production issues at the Escondida mine in
Chile lend support.
However, Covid-19 flare-ups in parts of China could weigh on
base metal prices, ANZ said.
The bank says at least 46 cities have advised against traveling
with tourist sites closing and cultural events halted. The likely
travel slowdown comes amid the peak summer travel season, fuelling
market expectation of poorer economic growth amid a weakening
hospitality sector, ANZ said. The three-month LME copper contract
rose 0.3% to $9,495.0 a ton.
Iron ore fell in early Asian trading amid market expectations of
more production cuts at Chinese steel mills, ANZ said, pointing to
the China Iron and Steel Association's signaling that the country
plans to reduce crude steel output by a greater extent.
However, ANZ thinks that any cuts aren't likely to be too strict
lest they impede economic growth. Chinese authorities recognize
that "the strict top down enforcement of emissions reduction goals
is seen hampering its efforts to stimulate economic growth," it
The most-traded September iron ore contract on the Dalian
Commodity Exchange fell 2.9% to CNY1,027.0 a ton.
TODAY'S TOP HEADLINES
Senate Infrastructure Final Vote Expected as Soon as This
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
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."
Robinhood Stock Price Jumps as Options Trading Begins
Small-time investors use Robinhood Markets Inc. to send stocks
to the moon. Now they are setting their sights on the trading app
Investors piled into Robinhood options on their first day of
trading Wednesday, helping send the stock up sharply. Robinhood,
which made its debut on Nasdaq last week at $38 a share, closed
Wednesday at $70.39, an 85% jump from its initial-public-offering
U.S. Private Sector Hiring Lost Steam in July, Missing
Expectations -- ADP
Hiring among U.S. employers slowed sharply in July, signaling
that the full recovery of the labor market could be bumpy despite
high economic growth.
The U.S. nonfarm private employment increased by 330,000 in
July, data from ADP National Employment Report showed Wednesday,
well below the 653,000 rise expected by economists polled by The
Wall Street Journal.
U.S. Services Sector Activity Accelerated in July to New
All-Time High -- ISM
Activity in the U.S. services sector accelerated in July from
the previous month, hitting a new record high, amid an increase in
demand and widespread supply-related problems.
The ISM Services Report on Business PMI increased to 64.1 in
July from 60.1 in June, data from a survey compiled by the
Institute for Supply Management showed Wednesday.
Brazil's Central Bank Raises Benchmark Rate to 5.25%, Sees More
Brazil's central bank raised its benchmark lending rate by a
full percentage point, picking up the pace of its increases after
inflation accelerated and the economy showed unexpected strength,
and said it expects to increase it by the same amount at its next
The bank raised the rate, known as the Selic, to 5.25% on
Wednesday from 4.25%, the fourth increase in as many policy
meetings. The Selic started the year at a record low of 2%, and the
bank raised it by three-quarters of a percentage point at each of
the previous three meetings.
Canada's Plan to Reopen Border Threatened by Labor Strife
OTTAWA-Canada's plan to reopen its border next week to U.S.
tourists could be in trouble as the union representing customs and
immigration officers said it is ready to cut services at land
crossings, airports and shipping ports Friday morning unless a new
labor agreement is struck.
A labor disruption could upend the North American economy, given
the tight supply-chain links between the U.S. and Canada.
Furthermore, it could deal another blow to Canadian businesses in
the travel, tourism and hospitality sectors, where sales plummeted
due to the Covid-19 pandemic amid border restrictions in place
since March of last year, and which were relying on a partial
reopening to help salvage what is left of the summer season.
U.S. Crude-Oil Inventories Unexpectedly Surge Higher
U.S. inventories of crude oil unexpectedly climbed sharply last
week despite an uptick in refinery activity, according to data
released Wednesday by the Energy Information Administration.
Benchmark U.S. oil prices that were sharply lower before the
report came out remained lower afterward. The Nymex front-month
crude contract for September delivery was recently down 2.2% at
$69.02 a barrel.
Beirut Port Explosion Fuels Lebanon's Collapse: 'May God Save
BEIRUT-In recent decades Lebanon has been a place of relative
calm in a turbulent region. Now it is living through a
once-in-a-century economic meltdown.
The collapse, rippling through all levels of society, has been
accelerated by the lasting effects of the explosion in the Port of
Beirut one year ago today.
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
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.
Taliban Claim Attack on Afghanistan Defense Minister's Home
KABUL-The Taliban claimed responsibility for a complex suicide
attack targeting the home of Afghanistan's defense minister that
killed eight people and wounded 20, one of the most serious
insurgent strikes in the Afghan capital in recent months.
Gen. Bismillah Khan Mohammadi, who took over as minister of
defense after the Taliban swept through northern Afghanistan in
June, wasn't at home during Tuesday night's attack. The ensuing
gunbattle between Afghan special forces and Taliban fighters
rattled downtown Kabul for several hours.
ESR Cayman to Acquire ARA Asset Management for US$5.2
ESR Cayman Ltd. is planning to acquire ARA Asset Management Ltd.
for US$5.2 billion in a move that would make it the largest real
estate manager in Asia Pacific.
As part of the deal, ESR will issue shares worth US$4.29
billion, translating to 27.00 Hong Kong dollars per share
(US$3.47), and another US$519 million in cash consideration, it
Boeing Says Weather Unlikely the Cause of Starliner
Boeing Co. said a storm Monday near the launch site in Florida
for its Starliner space capsule likely wasn't the cause of a
problem with valves in a propulsion system for the vehicle, but
teams plan more checks for water or electrical damage.
In a statement Wednesday evening, Boeing also said the problem
concerned valves in the propulsion system for Starliner's service
Fox Reports Higher Revenue, as Sports and Entertainment Events
Fox Corp., parent of Fox News and the Fox broadcast network,
said revenue rose in the latest quarter, as the company expects the
return of live sports and entertainment events will continue to
propel its growth.
Revenue for the company's fiscal fourth quarter was $2.89
billion, up 20% from the year-ago period.
DBS Group 2nd-Quarter Net Profit Rose 37% on Lower
DBS Group Holdings Ltd.'s second-quarter net profit rose 37% on
year as the bank set aside lower allowances for credit and other
Net profit for the quarter was 1.70 billion Singapore dollars
(US$1.26 billion), DBS Group, one of Southeast Asia's largest banks
by assets, said Thursday.
Uber, Lyft Drive Investors Away
Is the optimal strategy in ride-hailing growth or profits?
Investors can't have it both ways.
After Lyft said it achieved profitability on the basis of
adjusted earnings before interest, taxes, depreciation and
amortization on Tuesday, Uber said Wednesday that its losses
deepened sequentially on that basis as it made investments in
driver recovery. Shares of Lyft fell more than 9% the day after its
report while Uber's shares fell 8% in after-hours trading
immediately following the release of its second quarter
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Expected Major Events for Thursday
00:01/IRL: Jul Ireland Services PMI
04:30/NED: Jul CPI
06:00/NOR: May POSTPONED: Labour force survey SA, incl
06:00/NOR: 2Q Labour force survey
06:00/GER: Jun Manufacturing orders
06:00/GER: Jun Manufacturing turnover
06:45/FRA: Jun Industrial production index
07:00/CZE: Jun Retail trade
08:00/UK: Jul UK monthly car registrations figures
08:30/UK: Jul CIPS / Markit Construction PMI
09:00/CYP: Jul CPI
09:00/GRE: May Labour Force Survey
10:00/IRL: Jul Monthly Unemployment
11:00/UK: Bank of England Monetary Policy Report
11:00/UK: UK interest rate decision
12:30/CZE: Czech interest rate decision
23:01/UK: Jul BRC-Sensormatic IQ Footfall Monitor
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(END) Dow Jones Newswires
August 05, 2021 00:21 ET (04:21 GMT)
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