European stocks advanced Friday for a two-session winning
Industrials and energy sectors led gains while the materials
sector lost ground.
Stocks have been wobbly all month as investor concerns flit from
central bank policy to inflation to economic growth prospects. The
past few days have seen markets chiefly react-positively or
negatively-to mixed economic data, whether those be industrial
production, retail sales, or jobless claims.
"It is becoming increasingly apparent that there is little in
the way of direction for equity markets at the moment," said
Michael Hewson, an analyst at broker CMC Markets. "Investors are
increasingly looking for a narrative, whether it be positive or
negative to drive the next move, and are coming up
Recent political shifts have increased the odds of Germany
loosening its tight national fiscal rules after the September
elections, Oxford Economics said.
This could be good news given the drag from secular stagnation
and the investment needed for the green and digital transitions,
Oxford Economics chief German economist Oliver Rakau said.
Several proposals to tweak Germany's fiscal rules have been
developed, which could generate fiscal space of 1%-2% of GDP
annually, he said.
But these options are more likely to be explored fully under a
left-leaning government, which still appears unlikely, and would
also face legal and technical hurdles, Rakau said. "A wholesale
revision of the constitutional public debt brake as favored by the
Green party looks highly improbable," he said.
Shares on the move:
Travel stocks rallied on reports that the U.K. will ease
restrictions. International Consolidated Airlines rose 3.5% and
InterContinental Hotels added 3%.
Commerzbank moved 4.4% higher, after local German media reported
that U.S. private-equity group Cerberus was considering building a
greater stake in the bank after the German elections later this
Data in focus:
August's fall in U.K. retail sales reflects demand rotating into
services, HSBC's senior economist Elizabeth Martins said. U.K.
retail sales fell 0.9% on month in August, the third decline in
"U.K. retail sales volumes are still higher than pre-pandemic,
but having had a roaring start to the reopening period, they have
lost some momentum," Martins said.
The rotation into services is evident on the food sales side,
Sales in food stores fell 1.2% on the month in August, while
Open Table data showed restaurant bookings increased and, according
to the Office of National Statistics, social spending did too.
The drop in retail sales also reflects supply constraints, as
consumers can't buy what isn't on the shelves, Martin said.
Elsewhere, the price adjusted stock of orders in Germany in
manufacturing increased a seasonally and calendar adjusted 2.4% in
July on the previous month, according to provisional data from the
German statistics office Destatis.
The stock of orders has continuously increased since July 2020,
and in July 2021 it reached its highest level since the set of
statistics was introduced in January 2015, Destatis said.
However, in the past few months, new orders rose faster than
turnover, the statistics office said.
The range of the stock continued to increase, rising to 7.2
months in July, the highest level ever recorded. This range
indicates for how many months establishments would have to produce
goods until all orders on hand are filled, Destatis said.
Stock futures edged up ahead of fresh data on consumer
sentiment, pointing to a subdued end to a choppy week in
Stocks have seesawed this week as investors grappled with mixed
economic data in the U.S. and China and the spread of the Covid-19
Delta variant. This week brought the first sign of inflation easing
and an unexpected boost to retail sales, but also a slight rise in
Americans applying for initial jobless claims, a proxy for
"What this week tells us is that there's going to be this bumpy
normalization for the foreseeable future. All this mixed data puts
us a bit in limbo," said Ludovic Subran, chief economist at
Allianz. "The return of volatility in an environment that is a bit
of an in-between time is very probable."
Investors are awaiting a preliminary reading of the Michigan
consumer sentiment index for September, which is set to go out at
10 a.m. ET.
Invesco jumped over 9% in after hours trading after The Wall
Street Journal reported the company is in talks to merge with State
Street's asset management business. State Street rose 0.5%.
A rally which took the DXY dollar index to a three-week high of
92.9640 on Thursday pauses, leaving the DXY last down 0.1% at
92.8200, with investors lacking the impetus to push it higher,
The dollar has been lifted by safe-haven demand due to concerns
over slowing growth, rising inflation and "growing fears about a
possible international financial shock, potentially coming from
China," alongside better U.S. data such as retail sales, UniCredit
Yet the uncertain outlook leaves investors "reluctant to ride a
more sustained USD recovery," it said.
The DXY index is therefore stuck below 93 for now while EUR/USD
has support above 1.1760, it said.
Bitcoin climbed about 2% from the level at 5 p.m. Thursday,
trading around $48,000, according to data from CoinDesk. The
cryptocurrency fell below $44,000 earlier in the week before
recovering some ground.
Data showing an unexpected 0.9% fall in U.K. retail sales in
August, against the consensus forecast in a WSJ poll for a rise of
0.8%, "may take some of the momentum out of the rise in U.K. money
market rates and also GBP," ING said.
The impact may be limited, however, as the weak figures are
unlikely to prompt the Bank of England to "deliver a 'rate
protest'" against market pricing of future interest-rate rises at
next week's meeting, ING said.
This is likely to leave GBP/USD gravitating around 1.3800 and
EUR/GBP near 0.8500, it said.
European credit markets look poised for a good trading session
Friday, with cash spreads likely to remain unchanged or even
tighten slightly, said UniCredit.
"Despite robust activity in primary markets, European corporate
cash remains on a strong footing" analysts at the bank said. Gains
in stock markets this morning suggest volatile, riskier corporate
debt is likely to outperform during today's session, they said.
Meanwhile, the Treasury yield curve has been flattening this
week, signaling that investors are positioning ahead of the Federal
Reserve monetary policy meeting that begins Tuesday, according to
Chris Jeffery, head of rates and inflation strategy at Legal &
General Investment Management.
"That's telling us the market is starting to worry more about
the Fed," he said.
Oil prices were ticking lower as supply from U.S. refiners
shuttered by storms makes a slow return. Some analysts are betting
that oil prices could struggle to rise significantly above the $75
a barrel mark.
"The Delta variant is taking a toll on the pace of the demand
recovery across Asia, where vaccine rollouts and the lifting of
restrictions have been slower than in Europe and North America,"
analysts at Fitch Solutions said.
Supply increases from OPEC+ will bring the market back to a
position of oversupply next year, they added.
Gold prices ticked higher but are on course for a weekly loss,
as gold investors remain on the sidelines. The precious metal is
1.5% lower for the week.
Inflows into gold ETFs have remained lackluster, said TD
Securities. That is despite lingering concerns about high inflation
coupled with slowing growth.
Stagflation "is increasingly capturing the market's share of
mind, but the theme has yet to translate into inflows for gold," TD
Gold ETFs tracked by FactSet have seen a net outflow of $947
million over the last month.
Nonetheless, TD expects prices are unlikely to rout as
positioning data suggests most investors have already sold their
gold holdings, the bank said.
Italy to Impose Strict Covid-19 Health Pass for All Workers
ROME-Italy is making Covid-19 health passes mandatory for all
workers in the private and public sectors, in one of the toughest
vaccine-promoting measures adopted by any major Western
Prime Minister Mario Draghi's government passed a decree
Thursday requiring workers, including those who are self-employed,
to have a digital certificate known as a green pass. This shows a
person has been fully vaccinated, has recently recovered from
Covid-19 or has freshly tested negative for the virus.
Hezbollah Brings Iranian Fuel to Lebanon as Shortages Deepen
BEIRUT-A convoy of trucks carrying Iranian fuel rolled into
Lebanon from Syria on Thursday, a delivery arranged by
Tehran-allied Hezbollah to help alleviate a domestic energy crisis
and contain growing public anger against the ruling elite over the
country's economic collapse.
The powerful militant and political group brought the fuel in
via Syria in a likely effort to avoid embroiling Lebanon in U.S.
sanctions targeting Iranian oil exports.
France Calls U.S.-Australia Submarine Deal a Betrayal
France said it had been betrayed by the U.S. after being pushed
out of a multibillion-dollar deal to supply submarines to
Australia, in a public rupture between NATO allies that is shaping
up to be among the most bitter trans-Atlantic disputes of the Biden
administration's first year.
French Foreign Minister Jean-Yves Le Drian on Thursday called
the U.S.-backed deal a "stab in the back." President Biden on
Wednesday announced a new security pact with Australia and the U.K.
that would include a long-term agreement to build nuclear-powered
submarines for Australia. Australia on Thursday confirmed it was
withdrawing from the French contract.
France Says It Has Killed Islamic State Leader Responsible for
Deaths of U.S. Soldiers
France said Thursday it had killed Adnan Abu Walid al-Sahrawi,
the Islamic State leader who led the killing of four U.S.
servicemen in Niger in 2017 and was the architect of one of the
terrorist outfit's most successful franchises following the group's
loss of its Middle East territories.
"This is another major success in our fight against terrorist
groups in the Sahel," French President Emmanuel Macron said,
referring to the vast semiarid region south of the Sahara that has
become home to some of the world's most deadly jihadist cells.
Without Angela Merkel, Germany's Conservatives Face Possible
This is Germany's first general election without Angela Merkel
running for chancellor since 2002. For her conservative bloc, it is
shaping up as a debacle.
A gaffe-prone new candidate, the popular chancellor's almost
complete absence from the campaign, and voter fatigue after 16
years of conservative rule could converge to deliver the bloc's
worst national electoral result ever, according to pollsters and
Surging Energy Prices Close U.K. Factories, Another Bottleneck
in a World Full of Them
Soaring natural-gas prices in Britain have prompted U.S.
fertilizer maker CF Industries Holdings Inc. to close two U.K.
plants, in a sign that Europe's energy crunch is affecting industry
as the economy struggles with several other disruptions amid the
recovery from the pandemic.
Businesses across Britain are complaining about high energy
costs, with some steelmakers forced to halt production for periods
during the day as the price of electricity rises almost seven times
higher than at the same point last year. Power markets have also
jumped in France, the Netherlands and Germany, ahead of anticipated
higher demand in the winter.
Biden Steps Up Efforts to Advance $3.5 Trillion Spending
WASHINGTON-President Biden is taking a more public role in the
negotiations around Democrats' roughly $3.5 trillion social welfare
and climate bill, as lawmakers work through thorny policy
At the White House Thursday, he touted proposals to increase
taxes on high-income households and U.S. companies to finance the
plan, saying, "Big corporations and the super wealthy have to start
paying their fair share of taxes."
U.S., China Jockey for Position in Pacific With Moves on
China on Thursday moved quickly to counter an effort by the
U.S., U.K. and Australia to contain its ambitions in the Pacific,
saying it would apply to join a regional economic pact the U.S. had
eschewed, as Washington and Beijing maneuvered for economic and
military position in the theater that will define their great power
The U.S. has been amassing a network of alliances, including
India and Japan. The latest among the three English-speaking allies
will be an effort to provide Australia with nuclear submarines to
strengthen deterrence in the Indo-Pacific region, White House
officials said. Australia scrapped a multibillion-dollar submarine
deal with France as a result, prompting Paris to accuse the three
Fed to Review Financial Trading Rules for Officials
The Federal Reserve is launching a review of its internal rules
governing the financial activities of its officials in the wake of
news last week that the leaders of the Dallas and Boston regional
Fed banks actively traded in financial markets.
"Because the trust of the American people is essential for the
Federal Reserve to effectively carry out our important mission,
Chair [Jerome] Powell late last week directed Board staff to take a
fresh and comprehensive look at the ethics rules around permissible
financial holdings and activities by senior Fed officials," a Fed
spokesperson said Thursday.
MassMutual Fined for Failing to Oversee GameStop Trader Keith
A Massachusetts Mutual Life Insurance Co. subsidiary agreed to
pay a $4 million fine to settle an inquiry from Massachusetts
securities regulators into the social-media and trading activity of
its employees, including well-known GameStop Corp. investor Keith
Mr. Gill, known as "Roaring Kitty" on YouTube and
"DeepF-ingValue" on Reddit, became an Internet folk hero in
January, thanks to his prescient bets on GameStop stock. For months
leading up to the GameStop trading frenzy in January-during which
nonprofessional traders sent the company's shares soaring to a
record high-Mr. Gill posted videos and messages discussing why he
was putting large sums of money into the stock.
Glynn's Take: Review of RBA Is Something for Post-Covid Era
SYDNEY--Calls for a thorough review of the Reserve Bank of
Australia's practices reached fever pitch this week amid
suggestions that it is failing in key areas of its policy
It seems that the central bank, which controls interest rates
and has deployed unconventional policy to battle the pandemic and
avoid recession, is being singled out as the root cause of
Australia's economic woes.
Chinese Astronauts Complete Country's Longest Stay in Space,
Landing in Gobi Desert
HONG KONG-A trio of Chinese astronauts landed back on Earth on
Friday after three months in space, setting a record for the
country's longest stay in orbit as China pursues an ambitious space
China has marked a number of milestones in space this year,
including sending the first component of its space station into
orbit in April and the landing of a rover on Mars in May. The three
taikonauts, as astronauts are known in China, have been celebrated
as the country's space achievements dovetail with an era of
World Bank Cancels Flagship 'Doing Business' Report After
The World Bank canceled a prominent report rating the business
environment of the world's countries after an investigation
concluded that senior bank management pressured staff to alter data
affecting the ranking of China and other nations.
The leaders implicated include then World Bank Chief Executive
Kristalina Georgieva, now managing director of the International
Monetary Fund, and then World Bank President Jim Yong Kim.
SpaceX Inspiration4 Crew Wraps Up First Day in Space
The first all-civilian crew to orbit the Earth traveled nearly
six times around the planet during the mission of Elon Musk's
The four-person crew aboard the Crew Dragon space capsule made
history Wednesday evening when a Falcon 9 rocket lifted off from
Kennedy Space Center in Florida.
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(END) Dow Jones Newswires
September 17, 2021 06:03 ET (10:03 GMT)
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