MARKET WRAPS
Stocks:
European stocks dipped on Wednesday on concerns that inflation may not yet be fully under control in the eurozone. Read Spanish Inflation Ticks Higher Again in August
Stocks to Watch
Volkswagen is overvalued while Stellantis is priced quite low, Bernstein said, adding that the German car maker's market cap suggests a significant rise in free cash flow and a growth ceiling that is higher than all European legacy manufacturers. Read more.
U.S. Markets:
A pick up in Treasury yields was pressuring equity index futures after Tuesday's strong rally.
Ahead
Traders will be keen to see whether the ADP report on private sector employment during August confirms or confounds the expectation of a pause in Fed rate hikes in September.
More important data catalysts, the PCE inflation index and nonfarm payrolls report, will be published Thursday and Friday respectively.
Other U.S. economic updates set for release on Wednesday include the revision of second quarter GDP and the advanced reading of trade balance in goods, retail and wholesale inventories for July.
The main corporate focus is likely to be the results of Salesforce CRM, which are due after the closing bell.
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Forex:
Trading in EUR/USD has remained volatile, mainly due to the current lack of clear guidance from central banks on the interest-rate outlook, DZ Bank Research said.
"Central banks are currently at the turning point of their policy and will act purely data-dependent in the coming weeks and months."
This is leading to significant swings in the spot rate, depending on data outcomes, DZ Bank said.
Bonds:
Eurozone government bond yields were higher as Citi said investors expect above-forecast inflation in Spain and Germany, key data ahead of the European Central Bank's mid-September monetary policy meeting.
"Citi Economics expect upside surprises in the German and Spanish flash HICP print today, ahead of the euro area release tomorrow...These could already prove pivotal for September ECB rate hike expectations," Citi said.
It added that the money market is broadly split 50:50 about the chance of a 25 basis point interest rate rise in September.
Energy:
A broad risk on move across markets driven by shifting expectations of the Fed's next steps was helping lift oil prices.
Plus, the API reportedly said U.S. crude stockpiles slumped by 11.5 million barrels in the week through Friday, pointing to tightness in the market.
The Energy Department will release official stockpile figures later on Wednesday, which are forecast to show a far smaller 2 million barrel drawdown.
Elsewhere, producer and OPEC member, Gabon has become the latest African nation to suffer a military coup after a group of officers said they had seized control of the government.
The coup and the threat of disruptions to Gabon's oil exports were supporting oil prices, but only modestly as the nation is a minor OPEC producer, DNB Markets said. Read more.
Metals:
Base metals and gold prices struggled in early trading, as weaker-than-expected U.S. data added to market uncertainty.
"The July JOLTS survey suggests a further easing in labor demand and supports the case for the FOMC to hold the Fed Funds rate steady at its September meeting," Commonwealth Bank of Australia said.
CBA's base case is for the Federal Reserve to hold rates steady, though this could change if hiring rises.
DOW JONES NEWSPLUS
EMEA HEADLINES
Orsted Could Book Impairments of up to $2.34 Bln on US Portfolio
Orsted said late Tuesday that it could book impairments of up to 16 billion Danish kroner ($2.34 billion) related to its U.S. portfolio amid supply chain issues, lack of favorable progress in tax credit guidance and increased interest rates.
The Danish renewable-energy company said there is an increasing risk that some of its suppliers will be unable to deliver on their commitments and contracted schedules at the Ocean Wind 1, Sunrise Wind, and Revolution Wind projects in the U.S. This could increase costs and delay revenue from the projects and will lead to impairments of up to DKK5 billion as things stand, it said.
Prudential PLC First-Half Operating Profit Rises 6%
Prudential PLC's operating profit rose 6% in the first half of 2023, beating analysts' consensus forecast amid lower costs and higher profits from its asset-management business.
The insurance-and-investment business on Wednesday posted an IFRS-adjusted operating profit of $1.46 billion. The metric, which strips out exceptional and other one-off items, is one of its preferred metrics and a closely watched industry figure.
Spanish Inflation Ticks Higher Again in August
Spanish inflation rose again in August, taking it further above eurozone targets as fuel prices increased.
Consumer prices rose 2.4% in August from the same month a year earlier, harmonized to European Union standards and according to data released Wednesday by Spanish statistics office INE. This represents an uptick from the 2.1% harmonized level recorded in July, and takes price rises further above a European Central Bank target of 2%.
Harmony Gold Mining Swung to Profit
Harmony Gold Mining has reported a swing to net profit for fiscal 2023 as it benefited from higher underground recovered grades and gold prices in local currency.
The South African gold mining company said Wednesday that it made a net profit for the year ended June 30 of $275 million compared with a loss of $48 million for the comparable period a year earlier.
European Union New Car Sales Rose in July, Helped by Easing of Parts Shortages
Passenger-car registrations across the European Union rose around 15% on year in July, with the region recovering from the previous year's component shortages, according to the European Automobile Manufacturers Association.
New-car registrations-a reflection of sales-increased on year to 851,156 vehicles last month, the European car industry group known as ACEA said Wednesday.
GLOBAL NEWS
Military Officers Claim They Have Ousted Gabon's President
A group of officers in the central African nation of Gabon said Wednesday that they had seized control of the government, the latest military rebellion in a former French colony and Western military ally on the continent.
The officers' announcement, made on national television channel Gabon 24, came shortly after President Ali Bongo, whose family has ruled the country since 1967, was declared the winner of Saturday's presidential election with 64% of the vote. Local opposition parties have contested the results, which handed 64-year-old Bongo a third term in office.
Ukrainian Drones Strike Deep Inside Russia, Hitting Military Airfield, Other Targets
Ukraine launched its largest drone attack on military targets across Russia since the war began, disabling four military aircraft in a strike on the Pskov air base, as Moscow unleashed the most sustained missile barrage on the Ukrainian capital in months.
While Ukraine lacks the long-range cruise and ballistic missiles that Russia frequently fires into Ukrainian cities, destroying power stations, hotels, ports and residential buildings, Kyiv has developed an increasingly efficient force of domestically engineered strike drones that can travel several hundred miles into Russia.
Following Donald Trump, GOP Candidates Talk Tough on Trade
WASHINGTON-Donald Trump's antipathy to free trade has become Republican Party orthodoxy.
Candidates for the 2024 GOP presidential nod, including front-runner Trump, are pushing for more protectionist stances, especially toward China. They are calling for ending permanent normal trade relations with China-restricting the rights of U.S. businesses to expand there-and for boosting domestic manufacturing, even through government subsidies, something the Biden administration also has championed.
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This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
08-30-23 0544ET
