European stocks edged higher on Monday, tracking gains in global
markets, following a provisional deal on the U.S. debt ceiling.
"Provisional in the sense the bill is expected to be voted on by
a bipartisan and balky congress later this week, and there is
always a chance, no matter how slim, the hardline Republicans could
undercut McCarthy's efforts," SPI Asset Management said.
Trading was slightly more subdued with markets in the U.K. and
U.S. closed due to holidays.
Stocks to Watch
Puma's current share price suggests the market is pricing in a
too pessimistic scenario for the German sporting-goods company,
Baader Helvea said.
The company's stock is trading at a 50% discount to its
historical average price-to-forward earnings valuation, and at a
27% discount to peers, it added.
This implies that the market assumes no growth for Puma in 2024,
but recession fears should be behind it by then and the
sporting-goods market will likely have a more balanced inventory
level, Baader said.
Baader raised Puma to buy from add, but cut its target price to
EUR60 from EUR70.
The dollar edged lower, with risk appetite boosted, denting
safe-haven demand for the U.S. currency.
The [debt ceiling] deal "will likely restore some risk appetite
across markets," UniCredit Research said.
Read The Dollar Is Still King in Europe, and It's Swaying
The Turkish lira fell after Recep Tayyip Erdogan's win in
Sunday's runoff presidential election, extending his term in office
for another five years.
Erdogan's controversial policy of keeping interest rates low in
order to tackle high inflation has put pressure on the lira and
will likely continue to do so, UniCredit Research said.
"The TRY is expected to remain weak, likely reaching new record
lows against the USD beyond the 20.6588 level hit last week,"
UniCredit said, noting that Erdogan praised the low-interest rate
policy in his victory speech.
Trading in futures linked to U.S. government bonds was thin, a
result of the public holiday. But there was a mild decline in the
prices of futures linked to two-, five- and 10-year U.S. government
bonds during Asian trading hours.
Oil prices were higher as U.S. debt default risks and concerns
over its economy have eased.
ANZ said Russia's comment on potential cooperation with other
major oil producers in a meeting later this week is also likely to
support supply-side issues.
Gold futures declined slightly. For this week, the "recent debt
ceiling issue remains a focus in the bond and gold market," Guotai
Junan Securities said.
Gold will likely continue to fall if the Biden-McCarthy
debt-ceiling deal is approved by both houses of Congress before the
so-called X-date, the brokerage said.
DOW JONES NEWSPLUS
Turkey's Erdogan Defies Odds to Win Presidential Election
ISTANBUL-Turkish President Recep Tayyip Erdogan won Sunday's
runoff presidential election, establishing him as one of the great
survivors in recent political history and securing his outsize role
in global affairs for what could be years to come.
The head of Turkey's election board declared Erdogan the victor.
Erdogan won 52.13% of the votes, with his challenger, opposition
leader Kemal Kilicdaroglu, claiming 47.87% with more than 99% of
ballot boxes opened.
Saudi Arabia, Russia Ties Under Strain Over Oil-Production
Tensions are rising between Saudi Arabia and Russia as Moscow
keeps pumping huge volumes of cheaper crude into the market that is
undermining Riyadh's efforts to bolster energy prices, people
familiar with the matter say.
Saudi Arabia, the de facto leader of the Organization of the
Petroleum Exporting Countries, has expressed its anger to Russia
for not following through fully on its pledge to throttle
production in response to Western sanctions, the people said.
Russia Launches Largest Drone Attack on Kyiv Since Start of
KYIV, Ukraine-Russia launched a massive wave of suicide drones
against targets across Ukraine including the capital Sunday, in
what authorities said was its largest attack using the
Iranian-supplied drones since the start of the war in February
The drone strikes were part of a campaign of Russian shelling
and artillery attacks against targets in 12 regions across Ukraine
on Saturday and early Sunday, authorities said.
Volkswagen Bets an Old SUV Can Help It Win Over Americans
BERLIN-After decades of trying to sell German engineering to
Americans only to end up with a tiny slice of the world's most
profitable car market, Volkswagen has a new strategy: Pretend it is
Inspired by electric-truck startups like Rivian and the buzz
around Tesla's planned pickup, the European car giant is about to
relaunch the defunct Scout brand as an off-road electric vehicle
made to Americans' tastes.
Beverly Hills Voters Stymie LVMH Plans to Expand U.S. Hotel
Beverly Hills voters looked set to reject a proposal from LVMH
Moët Hennessy Louis Vuitton to build a hotel in the wealthy Los
Angeles-area enclave, setting back the luxury conglomerate's plans
to expand its hotel business in the U.S.
Slightly more than half of votes counted in Tuesday's referendum
were against plans by LVMH's Cheval Blanc brand to build its first
hotel in the U.S., a planned 109-room location on Rodeo Drive with
a private club, restaurants and commercial space for luxury
boutiques. County election authorities say they have around 2% of
ballots left to count, plus mail-in ballots that arrive by Tuesday.
The results are scheduled to be certified June 2.
WPP, Nvidia Team Up to Build AI-Enabled Content Engine
U.K. advertising-holding company WPP is teaming up with U.S.
chip giant Nvidia to develop a content engine that uses generative
artificial intelligence for digital advertising, the companies said
WPP and Nvidia said that, by integrating 3D tools with
generative AI, the engine will allow creative teams to produce
commercial content such as images or videos faster. The tool is
based on Nvidia's Omniverse Cloud platform, the companies said.
Biden, McCarthy Agree to Final Details of Debt-Ceiling Deal
President Biden and House Speaker Kevin McCarthy (R., Calif.)
have ironed out the final elements of their agreement to raise the
nation's borrowing limit, the two leaders said Sunday evening,
ahead of congressional votes on the deal that could come as early
as Wednesday in the House.
Their announcements came a day after White House and House
Republican negotiators reached a tentative deal to raise the debt
ceiling for two years and curb two years of government spending.
They have been racing to beat a deadline of June 5, when the
Treasury Department says the government could run out of money to
pay its bills, which could trigger an unprecedented default on U.S.
government debt and cascading problems through the global
Tech Stock Rally Leaves Small-Caps in the Dust
Shares of large companies are racing past their smaller
The Russell 1000 index of large companies has gained 9.2% this
year, beating the 0.7% advance of the small cap concentrated
Russell 2000. That is the widest outperformance since 1997, when
looking at years in which the Russell 1000 has been in positive
territory through May 26, Dow Jones Market Data show.
The Dollar Is Still King in Europe, and It's Swaying Interest
FRANKFURT-It's not just Americans watching anxiously to see if
the Federal Reserve raises rates or the U.S. slides into recession;
so are Europeans, and indeed many other countries. That's because
for all the talk of deglobalization and de-dollarization, the
dollar still reigns supreme, and financial and trade ties between
the U.S. and key partners are as strong as ever. In Europe's case,
they're even stronger.
The European Central Bank tried to chart a different path from
the Fed early last year, signaling it would hold rates low as the
Fed raised them aggressively. But after the euro slid against the
dollar, ECB officials quickly reversed course over fears of
imported inflation from goods like energy that are invoiced in
Why Are Markets So Calm? It's Revenge of the Quant Funds
The U.S. stock market is surprisingly calm right now, especially
in the face of the debt-ceiling fight. A key reason: a growing
divide between mainstream investors, who have largely been sitting
out the 2023 stock rally, and the machines whose buying has been
Only days remain until the U.S. blows past its debt-ceiling
deadline. On Saturday, President Biden and Republican House Speaker
Kevin McCarthy reached a tentative agreement to prevent a
destabilizing default. But passage of the plan, which is expected
to face opposition from some House conservatives this week, isn't
The AI Boom Runs on Chips, but It Can't Get Enough
The artificial-intelligence revolution is being likened by
Google's chief executive to humanity's harnessing of fire. Now if
only the industry could secure the digital kindling to fuel it.
A shortage of the kind of advanced chips that are the lifeblood
of new generative AI systems has set off a race to lock down
computing power and find workarounds. The graphics chips, or GPUs,
used for AI are almost all made by Nvidia. But the boom in demand
for them has far outpaced supply with the viral success of ChatGPT,
a chatbot that is able to respond to questions in humanlike
Wall Street Mobilizes for a Presidential Election,
On a farm in upstate New York last weekend, Wall Street types
groused about the coming presidential election in between bites of
Billionaire money manager Mario Gabelli and banker Ralph
Schlosstein were among the guests at former Honeywell Chief
Executive David Cote's Carnivore's Ball-a celebration of all things
meat-that featured lively discussions of potential
business-friendly candidates who could shake up the 2024 race. A
few meat-lovers spent the evening urging Ray McGuire, the Lazard
president and former New York City mayoral candidate, to run.
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(END) Dow Jones Newswires
May 29, 2023 05:54 ET (09:54 GMT)
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