MARKET WRAPS

Stocks:

European stocks edged higher on Thursday as investors continued to digest the U.S. inflation figures that diminished hopes the Federal Reserve will be cutting interest rates anytime soon.

"The fact that inflation in other places, like in the U.K., didn't pick up certainly helped cementing the idea that, this is certainly just a blip in the disinflation trend, and if it's not, the Fed's Goolsbee said that slightly higher inflation data for a few months will still be consistent with a further easing toward the Fed's 2% target," Swissquote Bank said.

London's FTSE 100 rose, supported by expectations that the Bank of England could start interest-rate cuts earlier than previously expected after the latest data showed the economy contracted by 0.3% in the fourth quarter of 2023.

"U.K. may have met the definition of a technical recession in [the fourth quarter], but the data appears to be hugely volatile beneath the surface and in any case, the growth outlook is looking brighter for 2024," ING said.

Shares on the Move

Pernod Ricard 's shares rose more than 5% after the company confirmed its mid-term outlook and posted first-half sales that met expectations.

Renault 's stock rose almost 5% following higher-than expected earnings and a raised dividend for 2023.

Stellantis shares rose after it set out new rewards for shareholders after posting record revenue and cash flow last year.

U.S. Markets:

Stock index futures were slightly higher and bond yields ticked down.

Earnings are due from companies including Deere and Wendy's, while the big economic data comes in the form of retail sales data for January .

The data won't likely resolve the push-pull over when the Fed will start to cut interest rates, in part because technical factors could muddy the picture that emerges from the report

Stocks to Watch

Albemarle said fourth-quarter revenue fell 10% to $2.36 billion on lower lithium market pricing. Shares fell 3.4%.

Tripadvisor swung to a profit in the quarter as its revenue rose 10%. Shares were rising 6.8%.

Forex:

Markets are currently pricing in more interest-rate cuts by the ECB than by the Fed for this year, and this is supportive of a strong dollar versus the euro, Swissquote Bank said.

"As such, the euro's depreciation against the dollar remains well supported by fundamentals."

However, the hawkish shift from the Fed and a stronger dollar could soften the ECB doves' hand and throw a floor under the EUR/USD selloff, Swissquote added.

UniCredit said the dollar remained "broadly healthy," even while it traded off this week's peaks as long-term yields were a tad lower as well.

Economic data scheduled for release, including retail sales and industrial production numbers, might represent a near-term crossroads for many major exchange rates, it said.

If data releases surprise on the strong side, "investors can be expected to buy the greenback even more intensively," dragging both EUR/USD and GBP/USD lower.

Sterling fell after the U.K. GDP data.

"Given [Wednesday's] weaker-than-expected inflation print, [the GDP data] will add to the negative GBP momentum over the short-term," MUFG said.

Nonetheless, sterling could later strengthen as Bank of England Bailey's comments on Wednesday indicated that the BOE's focus is on forward-looking indicators.

Bonds:

Eurozone government bond yields traded lower ahead of the EU's winter economic forecast and ECB President Lagarde's hearing at the Committee on Economic and Monetary Affairs of the European Parliament on Thursday.

"The downward revision of the EU Commission's winter GDP forecasts should not come as surprise, but it will add to the gloomy macro sentiment," Commerzbank Research said.

A raft of U.S. data will likely determine whether Bunds can rally further, it added.

Energy:

Oil prices slipped following the publication of a bearish U.S. EIA report, showing commercial crude inventories increased by 12 million barrels over the last week.

Meanwhile, global natural-gas markets remained under pressure with comfortable storage levels in both the U.S. and Europe as the world moves closer to the end of the heating season, while forecasts for milder weather have added further pressure, ING said.

The IEA said global oil demand is expected to grow at a significantly weaker pace this year, while soaring output from the Americas will help boost supply despite output curbs from OPEC and its allies.

Shell's new outlook for global demand for liquefied natural gas signals significantly higher capacity for the superchilled gas, but also marginally lower demand, RBC Capital Markets said.

"The combination of these two makes for a less bullish long-term picture versus a year ago, with the gap between supply and demand emerging further out post 2030 versus around later this decade previously."

Metals:

Base metals prices eked out some minor gains in early trading, as gold consolidated and negative sentiment from the U.S. inflation print eased.

Macroeconomic-driven volatility is likely to prevail over the coming months, as investors evaluate the data and try to assess the start and scale of monetary policy easing, analysts said.

"The market is currently quiet as China is celebrating the Lunar New Year, but we anticipate an increase in volatility next week," Sucden Financial said.


EMEA HEADLINES

Stellantis to Launch EUR3 Bln Buyback After Record Year

Stellantis said it will launch a buyback of 3 billion euros ($3.22 billion) after posting record sales and aftertax profit in 2023 despite a slower second half.

The multinational carmaker said Thursday that full-year net revenue reached EUR189.54 billion, up 6% from 2022. Analysts had estimated sales of EUR189.92 billion, according to a FactSet poll of 25 analysts.


Airbus Expects to Deliver More Planes in 2024 Despite Supply-Chain Challenges

Airbus posted higher fourth-quarter revenue and said it expects to deliver more planes to customers this year than in 2023, even as supply-chain hurdles persist.

The European plane maker anticipates about 800 commercial aircraft deliveries this year, above a 720 target that Airbus had set itself for 2023 and more than the 735 planes it actually delivered. The group was expected to guide for 813 deliveries this year, according to consensus estimates by Visible Alpha.


Centrica Swings to Higher Profit Than Expected, Lifts Dividend

Centrica said it swung to a significantly higher pretax profit than market expectations, and raised its dividend payout.

The U.K. energy company, which owns British Gas, said Thursday that it swung to a pretax profit of 6.47 billion pounds ($8.13 billion) last year from a loss of GBP383 million in 2022, thanks in particular to a strong performance in the British Gas energy unit, driving retail profit to GBP799 million from GBP94 million a year prior.


GLOBAL NEWS

Biden Adviser Says Soft Landing Helped by Public Spending Boost

Efforts to boost spending on infrastructure and computer chips, together with a surge in people returning to the workforce and business formation, have made it easier for the economy to bring inflation down without a big decline in economic activity, President Biden's top economic adviser said in an interview.

Lael Brainard, director of the White House National Economic Council, played down concerns that the so-called last mile of reducing inflation would become more difficult than it has been so far.


BlackRock Alum Launches Fund Focused on 'Weird and Wonderful' Assets

Pam Chan had a coveted job as global head of direct private opportunities at BlackRock, the world's largest asset manager.

She is leaving so she can focus solely on what she loves most: investing in obscure private markets.


Fed's Barr says banking system is strong despite New York Community Bancorp's woes

The recent troubles at New York Community Bancorp Inc. are not a sign of systemic problems in the U.S. banking system, a top Federal Reserve official said Wednesday.

"A single bank missing its revenue expectations and increasing its provisioning does not change the fact that the overall banking system is strong, and we see no signs of liquidity problems across the system," said Fed Vice Chair for Supervision Michael Barr, in a speech to a meeting of the National Association of Business Economics in Washington.


Europe Is Boosting Military Spending. It's Still Not Enough.

BRUSSELS-With a war raging nearby and the threat that a second Trump administration could pull the U.S. out of NATO, Europe has ratcheted up military spending. Arms manufacturers are working around-the clock, and new factories are going up to meet demand.

But Europe has a long way to go-and tough choices to make-if it aims to reduce its dependence on U.S. military support and face down Russian aggression.


U.S. Probes Israeli Strikes That Killed Civilians in Gaza, Possible Use of White Phosphorus in Lebanon

WASHINGTON-The U.S. is investigating several Israeli airstrikes in Gaza that killed dozens of civilians and the possible use by Israel of white phosphorus in Lebanon, as part of a probe by the State Department to determine whether one of America's closest allies has misused its bombs and missiles to kill civilians, U.S. officials told The Wall Street Journal.

The process shows the dilemmas facing the Biden administration, which so far has ruled out putting conditions on arms transfers to pressure Israel, but faces increasing calls from some members of Congress to do so as the war wears on.


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(END) Dow Jones Newswires

02-15-24 0628ET