European stocks were broadly lower, led lower by shares of
energy, travel and leisure companies.
Investors will pay attention to the European Central Bank's
decision on asset purchases and interest rates.
President Christine Lagarde and most of the rest of the ECB are
still in the inflation is transitory camp, at least for now. Of
course, inflation isn't quite as red hot in the eurozone as it is
in the U.S., with consumer prices up 3.4% year-over-year in
September, compared to 5.4% in the U.S., but it still faster than
what the ECB had said as recently as last month.
The bond market has reacted, pushing yields higher. A
combination of surging energy prices and a solid rollout of
vaccinations after a slow start is putting pressure on ECB
"The question for the upcoming policy decision is just what the
Governing Council and President Lagarde say or do to push back,"
said James Rossiter, head of global macro strategy at TD
Securities. Already, there's been some pushback, with the ECB's
chief economist, Philip Lane, saying "it's challenging to reconcile
some of the market views with our pretty clear, straightforward
Ebrahim Rahbari, a currency strategist at Citi, also expects
pushback, both to the rate rises priced into 2022 and 2023, as well
as the idea of a reconsideration of the plan to end quantitative
easing first and hike rates later. The ECB, Rahbari notes, is
scarred by a history of premature rate hikes, and also is wary of
raising risk for the periphery.
Shares on the move:
Shares in Shell were down 2.8% after the energy giant reported
lower-than-expected earnings for the third quarter. Adjusted
earnings of $4.14 billion are particularly disappointing and well
below expectations of $5.42 billion, CMC Markets analyst Michael
"Given how much fossil fuel prices have risen this quarter,
today's number are a particularly poor outcome, even if you factor
in the disruptions from Hurricane Ida, which cost the business $400
Shell has also noted higher costs elsewhere, but has said the
fourth quarter would see a better performance due to lower
maintenance costs, Hewson said.
Anheuser-Busch InBev, the world's largest brewer, reported a
rise in revenue and profits, boosting shares 7.2%.
Data in focus:
Eurozone business and household confidence rose in October,
beating forecasts of a decline.
The European Commission said Thursday that its economic
sentiment indicator, an aggregate measure of business and consumer
confidence, rose to 118.6 in October from 117.8 in September. The
result is above a consensus forecast from economists polled by The
Wall Street Journal, who expected the index to come in at
The increase of the indicator in October resulted from improving
confidence in services, construction and, to a lesser extent,
retail trade, the European Commission said.
Sentiment rose in Spain, France, Italy, the Netherlands and
Poland, while it weakened slightly in Germany.
German jobless claims fell much more than expected in October,
the Federal Employment Agency said Thursday.
Jobless claims fell by 39,000 on month after declining by 31,000
in September. Economists polled by The Wall Street Journal had
forecast a decline of 20,000.
The adjusted unemployment rate was at 5.4% in October, down from
5.5% in September and in line with the forecasts of economists
polled by the Journal.
The number of registered job vacancies stood at 809,000 in
October, up 206,000 on year, the agency said.
Spain's unemployment rate fell slightly in the third quarter of
2021 thanks to an easing of coronavirus-related restrictions that
allowed the recovery of the services sector.
The country's unemployment rate declined to 14.57% in the third
quarter from 15.26% in the previous quarter, Spanish statistics
office INE said Thursday. Jobless claims fell by 127,100 in the
quarter to a total of 3.42 million unemployed.
Stocks headed for muted opening gains as investors awaited data
on U.S. economic growth and earnings from Apple and Amazon.com,
among other major companies.
Ahead of the bell, shares of Ford Motor jumped 9%. The car maker
late Wednesday restored its dividend and raised guidance for
profits in 2021. eBay shares slid more than 5% premarket after the
online marketplace gave projections for earnings that fell short of
Wall Street expectations.
Forecast-beating results have soothed worries that supply-chain
difficulties would dent profits, sending stocks higher in October.
Earnings season continues at pace, with private-equity firm Carlyle
Group and chocolate maker Hershey among those due to file before
the opening bell, followed by Amazon and Apple after markets
"Earnings growth has been very strong," said Kiran Ganesh,
multiasset strategist at UBS Global Wealth Management, adding that
investors had also taken succor from slow progress in Washington
toward legislation that would raise taxes on companies and wealthy
Still, the market has remained jittery at times as investors,
lawmakers and central banks navigate the uneven economic recovery
from the pandemic. Stocks fell Wednesday, for example, after the
Bank of Canada's decision to end quantitative easing sparked
volatility in global bond markets.
Data on how fast the U.S. economy grew in the third quarter will
be released at 8:30 a.m. ET. Growth likely cooled as households and
businesses confronted supply-chain disruptions, labor-market
mismatches and the Covid-19 Delta variant. There is a range of
estimates as to how much the economy slowed.
The dollar could fall in reaction to data later that are
expected to show U.S. economic growth slowed in the third quarter,
although only temporarily, ING said.
ING analysts said their forecasts are broadly in line with the
consensus estimate of 2.6% quarter-on-quarter annualised growth for
third quarter gross domestic product, compared to the second
quarter's 6.7% growth, but they don't rule out a weaker number.
"Yet we are confident of the fourth-quarter U.S. rebound--the
consumer and businesses are in good shape--such that any dollar
weakness on the GDP data should find good buying interest," they
The euro edged lower as investors await the ECB's policy
decision later. The ECB is likely to err on the side of caution and
stick to its expansionary monetary policy so the market's
expectations for the withdrawal of stimulus will be "disappointed,"
Commerzbank currency analyst Antje Praefcke said. "In my view the
downside risks in EUR dominate today."
Sterling's appreciation potential looks limited as the Bank of
England is likely to accept a "fairly significant" overshoot of its
2% inflation target given the headwinds facing the economy,
The 100 basis points of interest rate rises priced in by the
market over the course of a year is unlikely, Commerzbank currency
analyst Esther Reichelt said.
"The headwinds to be expected in the coming months from supply
bottlenecks, the consequences of Brexit and the pandemic situation
seem too substantial."
If the BOE doesn't counter rising price pressures with
sufficient policy tightening, higher inflation will weigh on
sterling's purchasing power, Reichelt said.
The Japanese yen seems "unattractive," particularly against the
dollar, as the Bank of Japan is unlikely to change its loose
policies any time soon, Commerzbank said after the central bank's
interest rate decision.
Thursday's policy decision illustrated that the BOJ's "hands are
tied" when it comes to monetary policy and that the market might be
correct with its view that inflation will remain subdued,
Commerzbank currency analyst Antje Praefcke said. The BOJ left its
policies unchanged and cut its inflation and economic growth
forecasts, while the central bank's governor Haruhiko Kuroda said
the yen's recent weakness wasn't "bad" for the economy.
Pimco expects the ECB to reduce asset purchases gradually in the
coming months, it said. Pimco forecasts a monthly asset purchase
pace between EUR40 billion-EUR60 billion over the second quarter of
next year, following the phasing out of the Pandemic Emergency
Purchase Programme in March 2022, said portfolio manager Konstantin
The current pace is around EUR90 billion, with around EUR70
billion bought under the PEPP and EUR20 billion under the Asset
Purchase Programme. The ECB is also likely to continue to review
the asset purchases quarterly, with a view to gradually relegating
them from a duration extraction tool to a pure policy rate
signaling device over time, Veit said.
Santander Asset Management expects the first interest rate rise
by the U.S. Federal Reserve by June 2023 and anticipates three rate
hikes that year, with this outlook pulling U.S. Treasury yields
higher, it said.
"We expect the 10-year [Treasury yield] to trade in the range
1.50%-1.70% in the coming months," the asset manager said. It also
upgrades its view on U.S. government bonds slightly as yields have
increased and closed part of the gap to its target.
That said, even after the upgrade, Santander AM views U.S.
Treasurys as "underweight" versus "strong underweight" before.
Oil prices were lower, with both benchmarks extending this
week's losses to between 2% and 3% after EIA inventory data showed
a larger build up in U.S. crude inventories than either the market
or Tuesday's API data predicted, said ING's Warren Patterson.
Also pressuring oil during the past couple of sessions has been
the growing prospect that Iran and the EU could resurrect nuclear
talks which have the potential to see oil export sanctions on Iran
European benchmark gas prices were down 11% after Russian
President Putin told Gazprom to increase supplies to Europe once
the country fills its own stocks in early November.
Metals prices were edging higher ahead of U.S. GDP and
unemployment data. Investors are awaiting the U.S. economic data
for insight into the strength of the economy.
The data could also inform how quickly the Fed moves to raise
interest rates. Copper is often seen as a barometer for economic
growth, while gold is highly sensitive to investors' interest rate
Nokia 3Q Beats Forecasts But Component Shortages Cost Could
Weigh on Margins Next Year
Nokia Corp. on Thursday posted a forecast-beating rise in
third-quarter net profit and now expects full-year margins to land
at the top of its guidance range. However, it cautioned that both
the availability and "unprecendented" cost inflation of components
could hurt margins next year.
The company's comparable net profit for the quarter rose to 454
million euros ($526.8 million) from EUR300 million a year earlier,
as sales rose 2.0% to EUR5.4 billion.
UniCredit Lifts 2021 Guidance After Beating Expectations on
UniCredit SpA on Thursday reported a jump in third-quarter net
profit and lifted its targets for the full year.
The Italian bank's net profit rose to 1.06 billion euros ($1.23
billion) from EUR680 million a year earlier. It was significantly
ahead of analysts' median estimate of EUR825 million based on
Lloyds 3Q Beat Expectations as Pretax Profit Nearly Doubled
Lloyds Banking Group PLC reported on Thursday a nearly doubled
pretax profit for the third quarter of 2021, beating market
The FTSE 100 listed bank posted a pretax profit of 2.03 billion
pounds ($2.79 billion) for the quarter, up from GBP1.04 billion for
the same period a year earlier. Pretax profit was expected to reach
GBP1.35 billion, according to the bank's compiled consensus.
Shell 3Q Adjusted Earnings Fell as Hurricane Ida Hurt Business
Royal Dutch Shell PLC on Thursday reported that its earnings
fell 25% in the third quarter after Hurricane Ida hurt its
operations in the Gulf of Mexico.
The Anglo-Dutch oil-and-gas major said its adjusted earnings
were $4.13 billion for the period, down from $5.53 billion in the
second quarter and below market expectations of $5.31 billion,
provided by Vara Research and averaged from 22 analysts'
Volkswagen Backs Profit Target for 2021 After 3Q Hit by Chip
Volkswagen AG on Thursday confirmed its guidance for
profitability for the year after third-quarter operating profit and
revenue declined as the car maker was affected by the global
The German car maker said quarterly operating profit came in at
2.60 billion euros ($3.02 billion), compared with EUR3.18 billion
the same period a year earlier.
AB InBev 3Q Revenue, Headline Ebitda Rose; Raises FY
Anheuser-Busch InBev SA on Thursday reported a rise in both
revenue and third-quarter headline Ebitda, and raised its full-year
The world's largest brewer--which also houses the Stella Artois
and Budweiser brands among its portfolio--attributed its
performance to "relentless execution, investment in our brands and
accelerated digital transformation."
Sanofi 3Q Profit, Sales Grew; Raises 2021 Business EPS View
Sanofi SA on Thursday posted higher net profit and sales for the
third quarter compared with the previous year, and raised its
guidance for business earnings per share for the full year.
The French pharma major posted net profit of 2.32 billion euros
($2.69 billion) up from EUR1.95 billion in the same quarter a year
prior, on sales which grew to EUR10.43 billion from EUR9.48 billion
WPP 3Q Revenue Grew in All Regions and Markets; Lifts 2021
WPP PLC said Thursday that its third-quarter revenue grew and
raised its full-year guidance.
Total revenue for the quarter was 3.24 billion pounds ($4.45
billion), up 9.1% on a reported basis and 14.7% on a like-for-like
basis on year.
More Travelers Are Heading to Europe in 2022 After the Pandemic
Sank Vacation Plans
More travelers are starting to think big about vacations
After a long stretch of mainly short-term travel planning,
inquiries are picking up for trips well into 2022, according to
data from hotels and travel-industry analysts. The booking rates
are starting to trend closer to pre-pandemic levels, analysts
BOJ Lowers Outlook for Japan Growth, Inflation
TOKYO-The Bank of Japan lowered its growth forecast, reflecting
supply-chain constraints that have weighed on exports and
production, and said it didn't see significant inflation
In its quarterly outlook report released Thursday, the bank's
policy board projected the Japanese economy would expand 3.4% in
the current fiscal year ending March 2022, compared with its
previous projection of 3.8% released in July. It said it expects
2.9% growth in the year ending March 2023, up from a previous
projection of 2.7% growth.
Iran to Return to Nuclear Deal Talks in Vienna Next Month
Iran will return to nuclear talks before the end of November,
its chief negotiator said Wednesday, restoring the Biden
administration's hopes that it can revive the 2015 nuclear
Iran's return to the negotiations would end a five-month hiatus
in talks that has enabled Tehran's new hardline government to press
ahead with its nuclear program.
SEC Won't Approve Leveraged Bitcoin Fund
The Securities and Exchange Commission asked at least one asset
manager not to proceed with plans for a leveraged bitcoin
exchange-traded fund, according to a person familiar with the
The SEC indicated it wants to limit new bitcoin-related products
to those that provide unleveraged exposure to bitcoin futures
contracts, such as the ProShares Bitcoin Strategy ETF, which was
launched last week, the person said.
CFTC Chief Says Recent Crypto Cases Are 'Tip of the Iceberg'
WASHINGTON-The acting head of the Commodity Futures Trading
Commission said Wednesday that he plans to continue aggressively
policing cryptocurrency markets and called on Congress to consider
expanding his agency's authority to do so.
Rostin Behnam, the CFTC's acting chairman, noted that the agency
has settled two enforcement actions against cryptocurrency
companies totaling $140 million. "But this is the tip of the
iceberg," he said in a confirmation hearing before the Senate
Antidepressant Significantly Reduces Covid-19
A widely available antidepressant holds promise as a treatment
for Covid-19, according to a new study.
Covid-19 patients who received fluvoxamine were significantly
less likely to require hospitalization than those who didn't, in
the largest clinical trial evaluating the antidepressant's effect
on Covid-19 to date.
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(END) Dow Jones Newswires
October 28, 2021 06:17 ET (10:17 GMT)
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