MARKET WRAPS
Stocks:
European shares were little changed Wednesday, with global markets trading in narrow ranges, as money managers continued to assess whether the Federal Reserve may slow down plans to pare back its easy-money policies.
Investors are looking ahead to comments from Fed officials at the central bank's Jackson Hole Symposium later in the week for insights into the pace at which the central bank would taper bond purchases. Jerome Powell speaks virtually at the event Friday.
"It is wait-and-see because we're getting to the point where we think we'll get some definitive information on tapering," said Daniel Morris, chief market strategist at BNP Paribas Asset Management. "On one hand, we've had the signaling on tapering, but on the flip side, you see people looking at a deceleration in activity."
Shares on the move:
Pernod Ricard stock rose 1.3% after the drinks company said it expects to book additional profits of $163 million in the U.S. this year, including $33 million of profit from recurring operations, following a court ruling on import taxes. Pernod said the decision was in respect of a refund of import taxes.
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Shares in Augean jumped 17% after the U.K. waste-management group agreed a GBP341.2 million takeover from Eleia, a new company created by investment funds managed by Ancala Partners and Fiera Infrastructure.
"The feeding frenzy on the U.K. market has showed no sign of letting up as Augean agreed to an offer," said AJ Bell analyst Danni Hewson. "This continuing global corporate raid suggests bidders still see a lot of untapped value in the U.K. market. The danger is that if it doesn't let up soon, London will be left looking like a bit of a wasteland for stocks."
Data in focus:
German business sentiment worsened in August for the second consecutive month, according to a below-forecast Ifo reading, as supply bottlenecks and concerns over the Covid-19 Delta variant clouded the short-term outlook.
The Ifo business-climate index fell to 99.4 points in August from 100.7 points in July, the second consecutive decrease for the indicator after peaking at 101.8 in June. The reading missed the consensus forecast from economists polled by The Wall Street Journal, who expected the index to decrease to 100.3.
The reading could signal a loss of momentum in the economy in the second half of the year, said ING's global head of macro Carsten Brzeski. He said the easiest explanation for the fall is that optimism overshot in the spring and is now returning to normal levels.
A levelling off of these leading indicators at relatively high levels shouldn't be a source of concern for now, but if this has a negative impact on GDP growth, the German economy won't return to pre-pandemic levels this year, Brzeski said.
U.S. Markets:
U.S. stock futures wobbled Wednesday, suggesting muted trading for the indexes a day after the S&P 500 notched its 50th record close of 2021.
Dicks Sporting Goods and retail-trader favorite Express are set to report quarterly earnings ahead of the opening bell. Ulta Beauty and Salesforce.com are slated to post results after markets close.
Express shares, a longtime favorite of Reddit traders, jumped 8% premarket. Other meme stocks also rose, with AMC Entertainment Holdings gaining 3% after rallying 20% Tuesday. Koss shares gained 4% premarket.
Figures due at 1230 GMT will signal how demand for cars, appliances and other durable goods fared in July. Economists surveyed by The Wall Street Journal expect that new orders for products meant to last at least three years decreased 0.5%, seasonally adjusted, from the previous month.
Forex:
The euro rose, trimming earlier losses against the dollar, even after the disappointing German Ifo data, as traders focused on upcoming Fed comments at Friday's Jackson Hole symposium, keeping currencies stuck in tight ranges.
Ahead of the Ifo data, ING analysts said the 1.1700 support level for EUR/USD should hold in quiet markets.
Deutsche Bank said positioning is getting mostly longer the dollar across G10 and particularly in emerging markets. The bank continues to expect a Fed tapering announcement in November.
Bonds:
German government bond yields edged slightly higher, shrugging off weaker-than-expected August Ifo data.
The recent bull-flattening of the Italian government bond yield curve--where long-term bond yields are falling more quickly than their short-term peers--is making maturity extensions less attractive than some months ago, says Francesco Maria Di Bella, fixed income strategist at UniCredit.
This backdrop offers some relative value opportunities at the short end of the Italian curve, he said, referring to Italy's tap of the 0% January 2024 BTP on Thursday. This short-dated BTP looks appealing against slightly longer peers, he added.
Commodities:
Crude oil futures were lower in Europe as the recent rebound pauses. Although prices are up 8-9% so far this week, having reversed last week's sharp drop, they are still firmly lower for the month so far.
"The most serious concerns about demand, which is what had triggered [last week's] price slide, have faded away," said Commerzbank's Carsten Fritsch. This is in part thanks to "a considerable rise in crude oil imports and a further increase in crude oil processing in July" in India, he said, adding that "much the same [should] happen in other countries once the measures put in place to contain the Delta variant are eased."
Gold extended its losses in Europe as the dollar ticked higher, with bullion's sideways trading of recent months likely to end in September, as trading volumes return to normal levels and the Fed offers more clues about its tapering plans.
"The market is on hold at the moment, there are no real catalysts," said David Govett, a veteran trader of precious metals formerly at brokerage Marex. "Gold hasn't performed well enough in the past three to four months to attract any new money. The stock market, on the other hand, has and that is where the money has been going," he said.
Copper prices edged higher as concerns about Chinese demand eased, but TD Securities said the red metal could find dwindling support from economic growth in the longer term.
"Tailwinds are morphing into headwinds, while global growth eases and central banks begin to turn more restrictive, ultimately keeping the path of least resistance to the downside."
EMEA HEADLINES
German Business Sentiment Declined Again in August
German business sentiment worsened in August for the second consecutive month as supply bottlenecks and concerns over the Covid-19 Delta variant clouded the short-term outlook.
The Ifo business-climate index decreased to 99.4 points in August from 100.7 points in July, data from the Ifo Institute showed Wednesday. This is the second consecutive decrease for the indicator after peaking at 101.8 in June.
Pernod Ricard to Book Higher 2021 Profit After US Decision on Import Taxes Refund
Pernod Ricard SA said Wednesday that a U.S. decision regarding refund of import taxes will have a positive impact on its profitability this year.
"On Aug. 23, 2021, the U.S. Court of Appeals for the Federal Circuit rendered their decision in favor of the National Association of Manufacturers," the French drinks group said. "As a result, Pernod Ricard can claim drawback upon eligible spirits exported from the [U.S.], " it said.
Solvay, Shinkong Join Forces to Serve Taiwan Semiconductor Market
Solvay SA said Wednesday that it has agreed on the creation of a joint venture with Taiwan's Shinkong Synthetic Fiber Corp. for the development and production of electronic-grade hydrogen peroxide.
The new entity---which should begin operations in the first quarter of 2023 and will be called Shinsol Advanced Chemicals--will sell the chemical agent in Taiwan where the demand in the semiconductor industry is increasing, the Belgium company said.
Insurance Losses From Germany's July Floods Seen at EUR7 Bln
Insurance losses from July's catastrophic floods in western Germany are estimated at 7 billion euros ($8.23 billion), the German insurance association said Wednesday, making 2021 one of the most expensive years for natural-hazard losses for insurers in the country.
Around EUR6.5 billion in losses were for residential buildings, household goods and for companies, and about EUR450 million were for motor vehicles, the GDV said.
Mercedes-Benz Chief Technology Officer to Leave Company
Daimler AG's Mercedes-Benz said Tuesday that its Chief Technology Officer Sajjad Khan will leave the company.
Mr. Khan, also a member of the Mercedes-Benz management board, will leave at his own request on Sept. 1 to pursue his own entrepreneurial activities, the Stuttgart-based car maker said.
Just Eat to Create More Than 1,500 New Jobs in UK
Just Eat Takeaway.com NV said Wednesday that it plans to create more than 1,500 new customer-service jobs in the U.K. over the next year.
The food-delivery company said the new jobs will be based in Houghton le Spring, Sunderland, in northeast England, and are part of an investment of more than 100 million pounds ($137.3 million) in the region across the next five years.
Maersk Orders First Biofueled Megaships
Container ship giant A.P. Moller-Maersk A/S has ordered the first megaships powered by biofuels, as the industry moves to a new generation of vessels that will cut carbon dioxide emissions.
Maersk, the world's biggest boxship operator, is buying eight vessels from Korean yard Hyundai Heavy Industries Co. with an option to order another four. The ships will cost $160 million each, about 15% more than conventional vessels, said people familiar with the matter.
GLOBAL NEWS
Derby's Take: Economists Don't Expect Powell Taper Announcement This Week
It's pretty unlikely Federal Reserve Chairman Jerome Powell will announce in his speech Friday that the central bank is officially ready to start pulling back on its asset-buying stimulus effort, economists reckon.
(MORE TO FOLLOW) Dow Jones Newswires
08-25-21 0603ET
