MARKET WRAPS
Stocks:
Stocks in Europe made solid gains on Wednesday on hopes that central banks may be done with their aggressive rate hikes following better-than-expected inflation readings in the U.S. and the U.K.
"There is growing evidence that the major central banks' efforts are bearing fruit," Swissquote Bank said.
In London, miners were among the biggest risers on the FTSE 100, propelling the blue-chip index to a 4-week high, with property and retail stocks also performing well.
"With confidence there will be no [BOE] rate increases before the end of the year the market is now looking ahead to the prospect of rate cuts," AJ Bell said.
U.S. Markets:
Stock futures edged higher, with contracts on all three major U.S. indexes rising less than 0.5%.
Bond yields edged lower, with the yield on the 10-year note around 4.43%. On Tuesday it posted its largest daily decline since the March banking crisis.
Up ahead
Data on retail sales and producer prices are due before the opening bell, along with earnings from Target, TJX and Advance Auto Parts. Cisco Systems and Palo Alto Networks are due to report after the close.
Forex:
Sterling fell and looks vulnerable after data showed U.K. annual CPI inflation dropped sharply to 4.6% in October , below economists' forecasts and cementing the view that interest rates have likely peaked, ING said.
"The chances of a BOE surprise hike in December were already very low, but this morning's U.K. inflation figures for October are further helping a dovish case."
U.K. money markets are now close to pricing in a rate cut in June but ING still considers U.K. pricing to be "conservative" relative to the U.S. and eurozone, meaning sterling risks underperforming as the economy deteriorates.
Danske Bank Research said the dollar remains sensitive to incoming data after lower-than-expected U.S. CPI data caused the greenback to depreciate broadly against all G10 currencies on Tuesday.
Weaker-than-expected U.S. retail sales data on Wednesday "could provide an additional boost to cyclical-sensitive assets and further weaken the dollar," Danske said.
Bonds:
Eurozone government bond yields continued to fall in early trading, with investors betting on a higher likelihood of interest-rate cuts by the Fed in 2024.
"With the weaker [U.S.] CPI print, investors moved to significantly pare back the likelihood of another rate hike in this cycle," Deutsche Bank Research said.
In fact, markets moved to ratchet up the likelihood of an interest-rate cut by the Fed, with the prospect of a cut by May soaring to 86% by Tuesday's close from 23% on Monday, Deutsche said.
The announcement of Greece's up to EUR200 million auction of the 4.25% June 2033 bonds contributed to the 8 basis point underperformance of 10-year bonds versus Italian peers, but this might reverse after the supply is off the table, Citi Research said, "especially given the positive optionality into the Dec.1 Fitch rating decision."
A one-notch upgrade following S&P Global Ratings' similar move recently would make Greek government bonds eligible for inclusion in the Bloomberg Barclays Treasury index, Citi said, adding that this might be partly in the price, though.
Energy:
Oil prices inched lower following earlier gains on cooling U.S. inflation and the IEA revising up its demand estimates.
According to the IEA, Chinese demand for oil remains strong. In September, the country imported 17.1 million barrels a day, a record for monthly imports.
Official U.S. oil inventory data is due later in the day, but industry data released late on Tuesday pointed to a weekly build in inventories.
Metals:
Metal prices rose, helped by a weaker dollar with the macro mood more bullish as a result of cooling inflation in the U.S., Peak Trading Research said.
"Investors believe that this is 'mission accomplished' for the Fed," Peak said, adding that it is now unlikely the Fed will raise interest rates this hiking cycle, a tailwind for commodities.
"With the Fed now becoming a less threatening variable, the gloomy war factor will likely push prices higher in the very near term," Spartan Capital Securities said.
Its price target for gold is $2,050 an ounce--which would be near the all-time record high for the metal.
Mineral exports from the Democratic Republic of Congo are on the move as truckers in the world's top cobalt producer end a nearly two-week strike action, the Chamber of mines said.
The standoff, in which truck drivers were pushing for more risk allowances stranded more than 3,000 trucks loaded with around 100,000 metric tons of copper and cobalt, raising fears of a global supply crunch for metals key to electric vehicle manufacturing.
EMEA HEADLINES
Eurozone Set for Weaker Growth as High Inflation, Interest Rates Bite, EU Says
The eurozone is likely to grow at a slower pace than previously expected due to cost-of-living pressure and weakness in global trade, with the conflict in the Middle East adding to uncertainty, according to fresh forecasts set out by the European Union's executive Wednesday.
The 20-member currency bloc is expected to grow at 0.6% in 2023 and 1.2% in 2024, revised down from previous estimates of 0.8% and 1.3% for each year respectively, the European Commission said in its autumn forecasts.
Alstom to Cut Jobs, Scrap Dividend to Accelerate Debt Reduction
Alstom plans to cut around 1,500 jobs and scrap its dividend as part of a cost-savings plan to reduce debt and boost profitability.
The French train maker said Wednesday that it is also considering equity and equity-like issuances, as well as a capital increase, among potential options to accelerate its debt-reduction plans.
Siemens Energy Reviews Wind Business Structure After Swing to Loss
Siemens Energy is reviewing the structure of its troubled wind-turbine business and taking measures to strengthen the group's balance sheet after swinging to a net loss in its fiscal year.
"In a year with challenges, the excellent performance and success of 70% of Siemens Energy's businesses was offset by difficulties in the wind business," the Munich-based company said on Wednesday. "To help achieve the turnaround, and return Siemens Gamesa to profitability, the scope of Siemens Gamesa's activities is currently reviewed."
Renault's EV Maker Ampere Sets $11 Bln Revenue Target as It Gears Up for IPO
Ampere, Renault's electric-vehicle and software company preparing for a public listing, said it is targeting revenue of more than 10 billion euros ($10.88 billion) in 2025 while it readies to compete with less expensive cars from China and Tesla.
The French car maker, which was officially carved out form its parent company on Nov. 1, said on Wednesday that it is aiming to sell around 300,000 vehicles that year. In 2031, Ampere is planning to sell around 1 million vehicles and has a revenue target of more than EUR25 billion, the company said.
EU Drafts Rules to Cut Energy Sector Methane Emissions
The European Union has taken a step toward curbing methane emissions, agreeing on new rules aimed at cutting the amounts of the potent greenhouse gas produced in the energy sector.
The EU Council and Parliament reached a provisional deal early Wednesday on regulation to track and reduce emissions of methane, thought to be responsible for a third of current global warming, the council said in a statement.
GLOBAL NEWS
The Elusive Soft Landing Is Coming Into View
The U.S. economy is approaching what most economists had thought either unlikely or impossible: inflation returning to its prepandemic norm without a recession or even much economic weakness, a so-called soft landing.
"What we are expecting now is a soft landing," said Nancy Vanden Houten, lead U.S. economist at Oxford Economics. "We expect the economy to weaken quite a bit but it does look like we'll avoid an outright contraction" in gross domestic product.
Cooling Inflation Likely Ends Fed Rate Hikes
Inflation's broad slowdown extended through October, likely ending the Federal Reserve's historic interest-rate increases and sparking big rallies on Wall Street.
Consumer prices overall were flat last month and rose 3.2% from a year earlier, a slower pace than in September, the Labor Department said Tuesday. Overall inflation hit a recent peak of 9.1% in June 2022.
The $2 Trillion Interest Bill That's Hitting Governments
The world spent the past decade-plus taking advantage of rock-bottom interest rates to binge on debt. An unprecedented bill is coming due.
Governments are expected to spend a net $2 trillion paying interest on their debt this year as higher interest rates make borrowing more expensive, up more than 10% from 2022, according to an analysis of International Monetary Fund data by research consulting firm Teal Insights and a separate analysis by Fitch Ratings. By 2027, it could top $3 trillion, according to Teal Insights.
House Passes GOP Plan to Avert Government Shutdown
WASHINGTON-House lawmakers approved a Republican plan Tuesday that would continue funding federal agencies until early next year, a critical step in averting a partial government shutdown, with House Speaker Mike Johnson (R., La.) relying heavily on Democratic votes to get his bill across the finish line.
The 336-95 vote exceeded a two-thirds threshold required under a special procedure employed by Johnson to sidestep internal GOP disagreements. The measure still requires approval from the Democratic-controlled Senate, where the leaders of both parties have signaled support but timing was uncertain.
Ukraine Seeks to Reignite Counteroffensive With Daring River Crossings
KHERSON, Ukraine-Ukrainian marines slip across the Dnipro River at night in small groups to reinforce a growing contingent of troops engaged in a daring operation to reinvigorate Kyiv's military efforts in the occupied south.
(MORE TO FOLLOW) Dow Jones Newswires
11-15-23 0530ET
