European stocks posted modest gains on Thursday after a mostly
positive Asian session, with miners rising on firmer base and
"Looking ahead, the U.S. Thanksgiving celebrations should ensure
a relatively muted affair later into the day. Appearances from
European Central Bank President Lagarde and Bank of England
Governor Bailey thus make up the main events of note," note IG
Shares on the move:
Spanish hotel chain Melia rose almost 3% after Jefferies
upgraded the stock to buy from hold saying its valuation looks
attractive. Jefferies said Melia has a strong exposure to leisure
which is an advantage as vacation travel is recovering faster than
others, such as international and corporate.
"Roughly 80% of all bookings are leisure, making it the best
positioned covered hotel company for recovery and beyond, given our
positive leisure travel view," Jefferies said. Furthermore,
previous liquidity concerns have faded as Melia now has EUR440
million in liquidity and hasn't burned cash since May.
Shares in Remy Cointreau rose more than 10% after the drinks
group posted consensus-beating first-half profits and said it
expected higher full-year earnings than previously expected.
Looking ahead, Remy said the exceptionally strong first half
means it now sees "very strong" organic growth in current operating
profit for fiscal 2022. It had previously guided for "strong"
growth. The company didn't set out any numerical guidance, but a
likely figure is in a range of 40%-45% organic growth, above
existing consensus, analysts at Citi said in a note after the
Swiss Life rose nearly 4% after the insurer released strong new
mid-term targets at its investor day and revealed plans for higher
shareholder payouts and buybacks. Its expected fee results of
CHF850-CHF900 million by 2024, were above consensus of CHF830
million, Citi said. Cash remittance of CHF2.8-CHF3 billion were
also above Citi's expectations.
"The CHF1 billion buyback to be executed by May-23 is also
greater than our expectations as we had assumed recurring buybacks
of CHF200 million [per annum] over the three-year period," Citi
Sentiment in the German export industry has improved, the Ifo
Institute said. In November, the Ifo's export expectations
indicator rose to 15.8 points from 13.1 points in October, having
stood at 20.6 points in September.
"Despite supply problems for intermediate products and raw
materials, the German export industry is in a robust position,"
Ifo's president Clemens Fuest said.
The automotive industry and manufacturers of electrical
equipment are expecting significant growth in international
business. Among manufacturers of machinery and equipment,
expectations slipped slightly but are still at a good level, Ifo
said. Food and beverage manufacturers are cautiously optimistic
about winning additional export orders. Only printing companies are
expecting a decline in exports, Ifo said.
Fidelity International said the German coalition agreement is a
positive first step for the German economy and the capital markets,
but the future government must now deliver swiftly.
"It is a good sign that there have been relatively swift
results--despite the very different parties," said Fidelity's
portfolio manager Christian von Engelbrechten and capital markets
strategist Carsten Roemheld.
Clear and rapid decision-making is "elementary" in the global
context, they said, adding that if the coalition negotiations are a
harbinger of things to come in this respect, this is cause for
The fact that the Free Democratic Party is taking over the
Ministry of Finance "is likely to be very positively received by
the markets, as the FDP is perceived as the coalition party with
the most conservative and solid financial policy."
The dollar has consolidated some of its recent gains but still
has every reason to rise further after Fed minutes showed various
members proposed more flexibility on faster tapering and earlier
rate increases if inflation warranted it, said ING.
In addition, data showed high U.S. PCE inflation, the Fed's
preferred measure, and better-than-expected U.S. trade data, ING
"Expect quiet markets today for the Thanksgiving holiday and no
obvious reason for the dollar to hand back recent gains."
The krona was little moved but remained firmer after the
Riksbank left interest rates at 0% as expected and inserted a rate
increase into its forecasts for the fourth quarter of 2024.
Higher rates are still a long way off but this does mean the
central bank "is no longer as decidedly dovish," David Oxley,
senior European economist at Capital Economics, said.
Ahead of any rate increase, the central bank will begin reducing
its balance sheet. The asset purchase program initiated in March
2020 will end after 2021, though the Riksbank will buy more bonds
in the first quarter of 2022. Risks are that the Riksbank shrinks
its balance sheet faster than currently indicated, Oxley said.
SEB said the Riksbank decision was slightly more hawkish than
expected as the central bank expects an increase in the repo rate
in the latter part of 2024 with the repo rate forecast indicating a
25 basis-point rate hike evenly distributed between April and
"The Riksbank board is gradually tightening monetary policy
but...a repo rate hike still is distant."
If inflation surprises on the upside in 2022, SEB predicts the
board to move a rate increase closer in time and also lower the QE
purchases already in 2022. "We stick to our forecast of a rate hike
Eurozone 10-year government bond yields dropped in early trading
on collateral scarcity and renewed pandemic waves, even as the
focus remains on central-bank policy tightening and the future of
the ECB's asset purchases.
"There could be more clues about what options the ECB is
considering--and the shifting balance of power among the hawks and
the doves--in today's ECB accounts for the October meeting, which
provide only a very timid pushback to the hawkish re-pricing,"
Citi's rates strategists said.
The economic backdrop implies an underweight position in
government bonds for UBS Asset Management, whose focus is on the
more cyclical areas of the global equity market.
"The rates market has priced in earlier and sooner central-bank
rate hikes, but remains pessimistic on how much central banks will
ultimately be able to tighten this cycle," said UBS AM's Evan
Brown, head of multi-asset strategy investment solutions and Luke
Kawa, director for investment solutions.
The asset manager disagrees with market pricing and views the
backdrop for economic growth in this cycle as structurally better
than the last one.
Returns on inflation-linked bonds are unlikely to match this
year's strong performance next year, said UniCredit. Mounting
bond-market-derived inflation expectations have boosted returns on
this asset class. The Bloomberg U.S. Govt ILB Index 1-10Y returned
nearly 5% year to date, almost seven percentage points more than a
similar index of nominal Treasurys, which is currently delivering a
negative return of over 2%, UniCredit analysts said.
"With breakeven inflation [rate] close to a twenty-year high and
real yields at record lows, ILBs are unlikely to deliver a similar
outperformance next year." The analysts regard current 10-year
breakeven inflation as expensive and expect some moderation going
forward, suggesting ILBs are likely to deliver negative returns in
Oil futures were flat in early action, with trading volumes
likely to be thinner due to the U.S. holiday and with investors
already looking ahead to next week's OPEC+ meeting.
Prices have risen this week in the wake of a coordinated
strategic petroleum reserve release by several major consuming
nations that was smaller than the market had priced in. Now
investors are looking to the OPEC+ meeting next week, with The Wall
Street Journal reporting the alliance is considering pausing its
plan to relax production curbs.
Elsewhere, the EIA's weekly inventory report was "fairly
neutral," said ING's Warren Patterson.
Three-month copper on the LME was up 0.3% after a
mostly-positive batch of U.S. economic data, with metals also being
supported by reports that Indonesia plans to limit exports of many
That could include bringing a ban on bauxite exports forward by
one year to 2022. Bauxite is the primary material used to make
DOW JONES NEWSPLUS
Germany's Economy Grew Slightly Less Than Initially Estimated in
Germany's economy grew less in the third quarter than initially
reported, German statistics office Destatis said Thursday.
Gross domestic product rose by an adjusted 1.7% from the
previous quarter, according to Destatis in its second estimate for
the period. This expansion was less than economists' expectations
of 1.8% growth in The Wall Street Journal's survey.
Riksbank Pencils in First Rate Hike Toward End of 2024
Sweden's central bank on Thursday kept its key repo rate at 0%,
as expected, and indicated that a first rate hike will likely come
toward the end of 2024.
The Riksbank had previously said it expected the repo rate to
remain unchanged at zero throughout its forecast horizon that ran
to the third quarter of 2024, but updated forecasts presented
Thursday show a rate hike in the fourth quarter of 2024.
Remy Cointreau Shares Rise as 1H Beat Heralds Sunnier FY
Shares in Remy Cointreau SA trade sharply higher in early trade
Thursday after the French drinks group posted consensus-beating
first-half profit figures, and said that it anticipates higher
full-year earnings than previously expected.
At 0832 GMT, shares traded more than 10% higher at
Swiss Life Targets Midterm Fee Growth; Plans Higher Dividend,
CHF1 Bln Buyback
Swiss Life Holding AG on Thursday set out its midterm plan
targeting higher earnings and shareholder returns, as well as
reductions in emissions from its operations and portfolio.
Marking its capital-markets day, the Swiss insurer is targeting
an increase in its fee result to between 850 million-900 million
Swiss francs ($910 million-$964 million) by 2024, from CHF600
million-CHF650 million estimated this year. The adjusted return on
equity should rise to 10%-12% by the same year, from 8%-10%
expected this year, Swiss Life said.
Generali in Exclusive Talks to Buy Unit From Credit Agricole
Assicurazioni Generali SpA is in exclusive talks to buy Credit
Agricole SA's La Medicale business, the two companies said late
La Medicale is Credit Agricole Assurances' insurance subsidiary
for healthcare professionals.
Orange CEO Stephane Richard Resigns Following Suspended Jail
Sentence in Fraud Case
French telecommunications company Orange said late Wednesday
that Chief Executive Stephane Richard resigned after a Paris court
handed him a one-year suspended jail sentence, saying he was guilty
of complicity in the misuse of public funds in a long-running fraud
The Paris Court of Appeal said that it was also fining Mr.
Richard 50,000 euros ($56,002.50), in a ruling that stems from his
alleged role in an arbitration panel that gave a financial award to
a prominent French businessman when Mr. Richard was a senior
official at the French Finance Ministry.
Sweden's First Female Prime Minister Resigns Hours After Her
Sweden's first female prime minister resigned Wednesday evening,
just hours after her appointment, as her coalition government
Magdalena Andersson was named prime minister after a
parliamentary vote Wednesday, but she saw her budget bill fail to
pass in a vote later in the day. This meant that the budget
proposed by opposition parties was approved instead, an opposition
that includes the populist Sweden Democrats.
Europe Health Agency, in Shift, Urges Faster Covid-19 Booster
Rollout as Cases Surge
The head of the European Union's public-health agency
recommended governments accelerate their campaigns to roll out
Covid-19 booster shots as case numbers rise rapidly across parts of
Andrea Ammon, head of the European Centre for Disease Prevention
and Control, said on Wednesday that Covid-19 boosters should be
offered to everyone over 18 years old, six months after they were
first fully vaccinated, with priority given to those ages 40 and
Israel Warns White House Over Striking Partial Nuclear Deal with
Israeli officials are urging the White House not to strike a
partial nuclear deal with Iran, warning it would be a gift to the
new hard-line government in Tehran and stoking a growing public
rift with the Biden administration over Iran's nuclear program.
Senior Israeli officials say they fear that Washington is
setting the stage for a "less-for-less" deal that would offer
Tehran partial sanctions relief in exchange for freezing or winding
back parts of their nuclear work. The tension comes as nuclear
talks are set to resume on Monday, with expectations low that the
2015 nuclear deal-which the Trump administration withdrew from-can
be fully revived.
27 Migrants Drown in the English Channel
French authorities recovered the bodies of 27 migrants who they
said drowned in the English Channel trying to reach the U.K., one
of the area's deadliest migrant crossings in recent years.
A fisherman saw bodies floating in the sea on Wednesday and
alerted French authorities around 2 p.m. local time, officials
said. French Interior Minister Gerald Darmanin said five women and
a little girl were among the dead. He said only two migrants had
been rescued alive so far, and both remain in critical condition.
Rescue operations are continuing, he said.
What Inflation? Small Investors Keep Piling Into Flashy Growth
Conventional Wall Street wisdom says inflation is bad for growth
and technology stocks. Many small investors don't care.
Individual investors continue to stampede into shares of growth
companies, the types of buzzy stocks that have enjoyed explosive
price gains this year. Advanced Micro Devices Inc., Nvidia Corp.
and Apple Inc. are the three stocks most purchased this month by
individual investors, according to VandaTrack, a Vanda Research
flow tracker that measures net purchases.
Fed Officials Debated Inflation Concerns, Taper Pace at November
Federal Reserve officials expressed greater concern at their
meeting earlier this month about how long inflation would stay
elevated and discussed whether they should prepare to raise
interest rates in the first half of next year to cool off the
The Fed closed a chapter on its aggressive pandemic policy
response when it approved plans at the Nov. 2-3 meeting to shrink
its $120-billion-a-month asset purchases by $15 billion each in
November and December, a pace that would end the program by next
June. They want to end the asset purchases before they lift
interest rates, which they held near zero.
Bank of Korea Raises Rates Again With an Eye on Inflation
South Korea raised interest rates for the second time in three
months, expressing confidence in the global economic recovery while
giving priority to moves to curb accelerating inflation and soaring
The Bank of Korea increased its benchmark seven-day repurchase
rate by 0.25 percentage point to 1% on Thursday. In August, South
Korea became the first developed economy in Asia to raise rates
since the start of the Covid-19 pandemic, nudging up from a low of
U.S. Recovery Accelerates on Spending, Labor Market Growth
The U.S. economy showed broad-based signs of acceleration
heading into the end of the year, with consumers ramping up
spending, businesses stepping up investment and jobless claims
falling to historic lows.
Household spending rose 1.3% in October from a month earlier,
while personal income increased 0.5% last month, the Commerce
Department said Wednesday. Consumers are benefiting from a strong
labor market. And they are spending at a faster pace than
inflation, which recently hit a three-decade high.
Antitrust Tech Bills Gain Bipartisan Momentum in Senate
WASHINGTON-Support for curbing large technology companies'
market power is widening in the Senate, with lawmakers in both
parties endorsing new legal constraints on search engines,
e-marketplaces, app stores and other online platforms.
Lawmakers say they are responding to public concerns over the
size and influence of the tech companies.
China's State-Run Firms Limit Use of Tencent's Messaging App
SINGAPORE-Some Chinese state-run companies are restricting
employees' use of Tencent Holdings Ltd.'s popular domestic
messaging app, citing security concerns, according to people
familiar with the matter.
This week, managers at at least nine state-run companies,
including some of the nation's largest, such as China Mobile Ltd.,
China Construction Bank Corp. and China National Petroleum Corp.,
told employees that any chat groups set up for work purposes on
Weixin-Tencent's dominant messaging app in China-could contain
sensitive information and should be shut down and deleted, the
U.S. Invitation to Taiwan for Democracy Summit Tests Ties With
WASHINGTON-The Biden administration invited Taiwan to
participate in a meeting of democracies, further bucking Beijing's
long-pressed campaign to isolate the island diplomatically and
testing a recent lessening of U.S.-China tensions.
The inaugural Summit for Democracy, a virtual gathering
scheduled for Dec. 9 and 10, aims to bring together more than 100
democratic governments and excludes China, Russia and some other
countries with authoritarian leaders. By inviting Taiwan, the Biden
administration is broadening an effort to include the island in
international forums, raising its profile as a bulwark against
intimidation by Beijing, which claims Taiwan as its territory.
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(END) Dow Jones Newswires
November 25, 2021 06:26 ET (11:26 GMT)
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