Eurozone General Government Deficit/Debt, Consumer Confidence;
France Business Sentiment; Italy Industrial Turnover/Orders; U.K.
Public Sector Finances, CBI Industrial Trends Survey; OECD
Quarterly Employment Situation[ EU Summit; updates from SAP, ABB,
Roche, Fraport, TotalEnergies, Bollore, Remy Cointreau, Worldline,
Metro, Nestle, Accor, E.ON, Pernod Ricard, Siemens, Air France-KLM,
Swedbank, Renishaw, Randstad, Unilever, Barclays, Volvo, Telia,
Anglo American, Rentokil Initial, RELX, Anglo American Platinum,
Sasol, St James's Place
Renewed doubts about China Evergrande will likely cast a shadow
over European shares on Thursday. In Asia, stocks struggled for
meaningful gains; the dollar weakened further; while Treasury
yields, oil and gold all pushed higher.
Caution will dominate European stocks early Thursday, as fresh
worries about China Evergrande will likely outweigh the positive
impetus from a near-record finish on Wall Street.
Evergrande on Wednesday called off plans to sell a majority
stake in its property-management unit for the equivalent of $2.6
billion, a major setback in the real-estate giant's attempts to
ease its liquidity crunch.
The developer said it had planned to sell 50.1% of the
profitable subsidiary, Evergrande Property Services, to a unit of
rival developer Hopson Development.
The agreement was struck on Oct. 1 and was to be completed by
Oct. 12. It was terminated by Evergrande, which said in a
regulatory filing that it "had reason to believe...that the
purchaser had not met the prerequisite to make a general offer for
shares in Evergrande Property Services."
Hopson, in a separate filing, rebutted Evergrande's version of
events. It said it had been ready to buy the stake but the other
parties to the deal had made unacceptable requests to change the
terms. It said that included a demand that Hopson send all the
funds directly to Evergrande, rather than first depositing the
payment with the property management unit, as the agreement had
The news capped gains for stocks in Asia, although property
developers in China found some support from verbal assurances by
government officials and the loosening of rules around home loans
at some banks, said IG.
Sectors to watch:
The semiconductor shortages currently affecting the global
automotive industry should stabilize in the second half of next
year, with a full recovery to come by 2023, said RBC Capital
Markets analyst Tom Narayan. He expects global light vehicle
production to reach the level of 2019, when around 89 million
vehicles were made, by 2023.
While the first half of 2023 should show improvement, companies
should be able to start making up missed backlog in the second half
of the same year, Narayan said. For 2021, the bank has forecast
global auto production to be around 75 million vehicles, and around
83 million units could be produced in 2022.
The dollar was broadly softer in Asia, extending Wednesday's
losses as risk appetite improves.
However, weakness in havens such as the yen and the dollar may
be limited by renewed concerns about China Evergrande Group after
the cash-strapped developer called off plans to sell a majority
stake in its property-management unit. This has increased pressure
on Evergrande to raise cash elsewhere, as the 30-day grace period
on some of its interest payments comes to an end this week, said
Bank of America said ahead of the next FOMC meeting in November,
at which the start of bond tapering is expected to be announced,
"we expect the USD to be supported and the U.S. to continue to act
as the main driver of global FX market." BofA said previous sharp
rises in global yields during the June 2013 taper tantrum,
September 2019's money-market squeeze and June's hawkish FOMC
meeting were bullish for the dollar.
Ebury said the dollar should weaken over the next year even
though the Federal Reserve could start tapering asset purchases as
soon as November and raise interest rates in the second half of
Analysts at the financial services firm said the dollar has
continued to benefit from concerns about coronavirus and rising
inflation pressures slowing the global recovery but these worries
are perhaps "slightly overblown." Market sentiment will "take a
turn for the better," especially once developing nations have
rolled out vaccines to a larger share of their populations, they
Ebury expects EUR/USD to rise to 1.22 and GBP/USD to rise to
1.45 by the end of 2022.
Ebury also expects the Swiss franc to weaken on reduced
safe-haven flows once the global economic outlook improves. "We
think that an improvement in market sentiment is on the cards as
the pandemic situation continues to normalize." It has forecast
EUR/CHF to rise to 1.12 by the third quarter of 2022 from 1.0705
Treasury yields remained elevated in Asia, with the 10-year note
yield holding at a five-month high following Wednesday's 20-year
auction and the Beige Book report, which indicated the U.S. economy
was growing at a "modest to moderate rate" amid a low supply of
workers and elevated prices.
Bond investors are particularly attuned to the prospects of a
potentially faster pace of Fed tapering, which would suggest that
the central bank may be inclined to raise interest rates faster
than expected to quell intensifying pricing pressures.
Fed Governor Randal Quarles warned that extended high inflation
through next spring could force the central bank to consider
raising interest rates sooner than anticipated. He also said he
will support the decision at the Fed's next meeting in November to
start tapering asset purchases.
AXA Investment Manager said credit valuations remain expensive
but some pockets of U.S. high-yield corporate debt and European
credit look attractive.
Nick Hayes, manager of the firm's Global Strategic Bond strategy
sees short-dated, high-carry opportunities "further down the rating
spectrum" in the U.S. high-yield corporate bond market, though the
asset manager is underweight energy due to its ESG-integrated
Rather, it individually assesses single B- and CCC-rated debt
where average yields are 4-6%, Hayes said. More generally, AXA
prefers lower-quality investment-grade credit over higher quality
and sees value in select subordinated financials with more
attractive spreads and strong fundamentals.
Oil futures added to gains in Asia, buoyed by a surprise weekly
decline in U.S. crude inventories and a drop in gasoline stocks to
their lowest in almost two years, even as China's move to bolster
coal supplies looked to dull the outlook for oil demand.
The EIA numbers were "undoubtedly on the bullish side," Tariq
Zahir, managing member at Tyche Capital Advisors, told MarketWatch.
The data helped alleviate an "overbought situation" in crude oil,
The fall in crude supplies has prompted U.S. benchmark oil
prices to move up more sharply than Brent, which has seen limited
gains following news on China. Beijing's top economic planner this
week vowed to use "all necessary means" to roll back record coal
prices, The Wall Street Journal reported, including domestic laws
that let the government limit profit and prices for essential
"This should pressure the high coal prices to ease lower and, in
turn, bring oil prices lower too," said Brian Swan, senior
commodity analyst at Schneider Electric, in a note.
Gold edged higher but gains may be capped by higher Treasury
Gold's latest rise has come as Fed rate-increase expectations
may have gotten a bit too aggressive, said Oanda, noting Fed Gov.
Waller's comments on Tuesday. However, gold currently has two
headwinds: rising Treasury yields and Bitcoin, which is being used
as an inflation hedge instead of the precious metal, Oanda
Gold futures settled higher for a second day in a row on
Wednesday, as support from concerns over a rise in inflation
outweighed pressure from strength in Treasury yields.
In other metals news, nickel extended its recent gains, with the
three-month LME contract on its sixth consecutive winning session
following concerns that Indonesia could slow its nickel-ore exports
support, said ING.
Indonesia said the government plans to hit the brakes on
exporting raw materials. Additionally, Russian nickel smelter
Nornickel, reporting weak production volumes, may also result in
increased market tightness. Nickel prices are 10% higher from a
TODAY'S TOP HEADLINES
China Evergrande Calls Off Plans to Sell Key Unit for $2.6
SINGAPORE-China Evergrande Group called off plans to sell a
majority stake in its property-management unit for the equivalent
of $2.6 billion, a major setback in the real-estate giant's
attempts to ease its liquidity crunch.
The cash-strapped developer said Wednesday that it had planned
to sell 50.1% of the profitable subsidiary, Evergrande Property
Services Group Ltd., to a unit of rival developer Hopson
Development Holdings Ltd.
Fed Official Says Lingering Inflation Could Change Interest-Rate
A top Federal Reserve official warned that extended high
inflation through next spring could force the central bank to
consider raising interest rates sooner than anticipated.
Fed governor Randal Quarles said Wednesday he still expects
higher prices to ease next year as bottlenecks and supply-chain
disruptions fade. If the Fed raised rates in response to recent
price surges driven by the economic reopening, the central bank
could constrict demand at the same moment that supply bottlenecks
abate, Mr. Quarles said during a moderated discussion at a
conference in Los Angeles. That could lead to undesirably low
levels of inflation and employment.
U.S. Growth Slowed in Recent Months Amid Elevated Prices, Fed's
Beige Book Says
U.S. economic growth slowed to a modest to moderate rate this
fall as firms confronted supply-chain disruptions, elevated prices,
a shortage of available workers and fears around the Delta variant
of Covid-19, the Federal Reserve said Wednesday.
Many businesses said they expected higher prices and supply
shortages to last another year or so. The report, known as the
Beige Book, collects anecdotes from businesses in Fed districts
around the country.
Bitcoin Price Surges Past $66,000, Reaching New High
Bitcoin hit a new high Wednesday, powered by a wave of buying
after the first U.S. exchange-traded fund linked to the
cryptocurrency started trading.
Bitcoin traded as high as $66,974.77 on Wednesday, passing the
previous high of $64,889 set in April, according to CoinDesk. It
fell to as low as $29,608.60 in July before roaring back on a
series of developments that signal the digital currency's move from
the shadowy fringes of the investing world to the regulated
Critics Blast Private Equity at Senate Hearing
At a Senate hearing Wednesday, private-equity critics denounced
what they characterized as buyout managers' abusive practices, as
some Democratic lawmakers seek to rein in the rapidly growing
Sen. Elizabeth Warren (D., Mass.) led the hearing of the U.S.
Senate Committee on Banking, Housing and Urban Affairs, at which
workers, an academic and a state treasurer loosed volleys of
criticism against private-equity managers and asked lawmakers to
increase federal oversight of them.
Investors Wager Debt-Ceiling Reprieve Passes Quickly
Congress's recent deal to lift the government borrowing limit
has eased distortions in the short-term Treasurys market-a partial
reprieve that is likely to prove fleeting, according to investors
Before lawmakers reached a stopgap deal to lift the debt ceiling
earlier this month, their standoff over the issue had skewed the
bond market in two different ways.
Russia Orders People Not to Go to Work as Covid-19 Deaths
MOSCOW-Russian President Vladimir Putin ordered people to stay
off work for at least a week while Latvia has introduced a
monthlong Covid-19 lockdown as deaths climb, driving renewed fears
of another wave of infections as winter sets in.
Mr. Putin signed a decree Wednesday approving a period of
nonworking days, as the government calls them, beginning Oct. 30
and stretching to Nov. 7 to encourage people to stay home and slow
the spread of the virus. Regional governments where infection rates
are especially virulent can speed up or prolong the measures, with
employers continuing to pay their staffs as they stay home.
Trump's New Social-Media Company Plans to Go Public via SPAC
Former President Donald Trump unveiled a new digital-media
venture Wednesday and said it would go public by merging with a
special-purpose acquisition company.
Trump Media & Technology Group will create a social network
called Truth Social to fight such companies as Facebook Inc. and
Twitter Inc., the Trump company said in a press release late
Wednesday. Mr. Trump's access to several social-media platforms was
restricted following the Jan. 6 assault on the U.S. Capitol.
China's Modern Land Withdraws Debt Extension Request on
Modern Land (China) Co. has withdrawn its plan seeking
permission from its debtholders to allow the Chinese property
developer to delay repaying a $250 million bond, citing liquidity
The company, which along with many Chinese developers are facing
financial stress, said late Wednesday that it is in talks to engage
a financial adviser to help assess Modern Land's capital structure,
liquidity profile and financial condition.
IBM's Revenue Misses Wall Street Projections as Client Spending
International Business Machines Corp. reported
weaker-than-expected revenue in the latest quarter, weighed down by
its cloud business and some clients' pause in spending.
IBM's cloud and cognitive-software business had $5.69 billion in
revenue, shy of analysts' projected $5.77 billion, according to
Moderna and J&J Covid-19 Boosters, Mixing and Matching
Authorized by the FDA
U.S. health regulators significantly widened the nation's
Covid-19 booster campaign, clearing use of extra doses of Moderna
Inc. and Johnson & Johnson vaccines and also saying people can
get a shot that is different from what they had previously
The moves, announced by the Food and Drug Administration on
Wednesday, will make boosters available to the majority of adults
who have been fully vaccinated and have passed the recommended
Tesla Posts Record Quarterly Earnings on Supply-Chain
Tesla Inc. notched a third consecutive record quarterly profit,
thanks in part to the electric-vehicle maker's ability to navigate
persistent global supply-chain disruptions.
The strong earnings came after Tesla delivered roughly 73% more
vehicles than in the year-ago period. Underpinning that growth was
an uptick in sales of vehicles made in China, now home to Tesla's
largest auto plant by output.
Write to email@example.com
Expected Major Events for Thursday
04:30/NED: Sep Unemployment
04:30/NED: Oct Consumer confidence survey
04:30/NED: Aug Consumer Spending
06:00/UK: Sep Public sector finances
06:00/DEN: Oct Consumer expectations
06:45/FRA: Oct Monthly business survey (goods-producing
07:00/SPN: Aug Industrial Orders & Turnover
07:30/SWE: Sep Labour Force Survey
08:00/ITA: Aug Industrial turnover & orders
08:00/ICE: Sep Harmonized CPI
08:00/POL: Sep Retail Sales
09:00/EU: Annual General government deficit and debt - 2nd
10:00/FRA: 2Q OECD Quarterly Employment Situation
10:00/UK: Oct CBI Industrial Trends Survey
11:00/TUR: Turkish interest rate decision
13:00/BEL: Oct Consumer Confidence Survey
14:00/EU: Oct FCCI Flash Consumer Confidence Indicator
15:59/GRE: Aug Balance of Payments
22:00/NED: Sep House Price Index
23:01/UK: Oct UK Consumer Confidence Survey
All times in GMT. Powered by Kantar Media and Dow Jones.
Write to us at firstname.lastname@example.org
We offer an enhanced version of this briefing that is optimized
for viewing on mobile devices and sent directly to your email
inbox. If you would like to sign up, please go to
This article is a text version of a Wall Street Journal
newsletter published earlier today.
(END) Dow Jones Newswires
October 21, 2021 00:31 ET (04:31 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.