European stocks posted modest gains on Thursday after a mostly positive Asian session, with miners rising on firmer base and precious-metal prices.

"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 analysts.

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 release.


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 says.

Economic Insight:

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 optimism.

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 noted.

"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 December 2024.

"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 by end-2023."


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 the future.


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 raw materials.

That could include bringing a ban on bauxite exports forward by one year to 2022. Bauxite is the primary material used to make aluminum.




Germany's Economy Grew Slightly Less Than Initially Estimated in 3Q

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 2022

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 EUR206.80.


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 Wednesday.

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 case.

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 Appointment

Sweden's first female prime minister resigned Wednesday evening, just hours after her appointment, as her coalition government collapsed.

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 the bloc.

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 older.


Israel Warns White House Over Striking Partial Nuclear Deal with Iran

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 Stocks

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 Meeting

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 economy.

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 household debt.

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 0.50%.


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 people said.


U.S. Invitation to Taiwan for Democracy Summit Tests Ties With China

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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