Watch For:

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.

Opening Call:

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 July.

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 decisions.

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 closely watched.

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 its position.

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 note.

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, they said.


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 said.

The most-traded September iron ore contract on the Dalian Commodity Exchange fell 2.9% to CNY1,027.0 a ton.



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 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 itself.

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 price.


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 Hikes Coming

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 meeting.

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 the Country'

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 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.


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 Billion

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 said Thursday.


Boeing Says Weather Unlikely the Cause of Starliner Postponement

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 module.


Fox Reports Higher Revenue, as Sports and Entertainment Events Resume

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 Allowances

DBS Group Holdings Ltd.'s second-quarter net profit rose 37% on year as the bank set aside lower allowances for credit and other losses.

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 results.


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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 unemployment

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

All times in GMT. Powered by Kantar Media and Dow Jones.

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(END) Dow Jones Newswires

August 05, 2021 00:21 ET (04:21 GMT)

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