MARKET WRAPS
Stocks:
European stocks traded mixed on Friday, as investors digested more mixed earnings, and as they looked to next week's central banks rate decisions.
Societe Generale said both the Federal Reserve and the European Central Bank are poised to raise interest rates again next week and keep the door open for more.
"The Fed will likely retain a hawkish stance after delivering a hike at next week's [Federal Open Market Committee] meeting."
The ECB, meanwhile, will most likely keep the door open for a rate rise in September, SocGen added.
Read Markets Are Certain About ECB's July Rate Rise; See High Probability for September
Read Market Volatility Might Rise Around ECB Meeting, Inflation Data
The FTSE 100 edged higher after mixed U.K. economic data.
June retail sales rose 0.7%, much better than forecast, but GfK's Consumer Confidence Index fell to minus 30 in July from minus 24 previously, "signalling a potential sign of consumer capitulation in the current environment", Interactive Investor said.
Stocks to Watch
European chemical companies including BASF, Wacker Chemie and Evonik Industries have recently issued profit warnings, but several of their peers could still be at risk of downgrades, Jefferies said. "The majority of our European chemicals coverage still require an above-average 2H earnings contribution to achieve consensus and guidance estimates." Read more .
Hargreaves Lansdown's second-half beat in a difficult inflation environment prompts a more positive view on the retail-investment platform's future flows, Jefferies said, raising the stock to buy from underperform and its target price to 1,015 pence from 800 pence. Read more .
U.S. Markets:
Stock futures edged up, pointing to markets stabilizing after Thursday's Nasdaq selloff.
Investors are parsing U.S. economic data and news on Chinese stimulus as earnings reports trickle in.
"If we get through the earnings season without big downgrades, then that's good news. It reinforces that things are okay and that maybe a soft landing is more probable," Legal & General Investment Management said.
Treasury bonds stabilized. The benchmark 10-year Treasury yield held broadly steady, after climbing Thursday to 3.853%.
Stocks to Watch
CSX recorded a decline in top- and bottom-line results against a backdrop of challenges including long-running staffing shortages and intermodal activity. Shares fell 3.8%.
Tesla was rising 2.2% in premarket trading after slumping 9.7% on Thursday following its second-quarter earnings report that revealed a continued decline in profit margins on steep price cuts.
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Forex:
U.S. short-term bond yield moves suggested the dollar, which rose to an eight-day high against a basket of currencies this week, could be higher, ING said.
"One could argue that the dollar should even be a little higher given that two-year U.S. yields have retraced about 50% of their drop in the first half of July and the DXY has only retraced one-third of its losses, " ING said.
Trade should be quiet, however, as traders avoid large positions before next week's decisions by the Federal Reserve, European Central Bank and Bank of Japan, it added.
Bonds:
Eurozone sovereign issuers have completed around 67% of planned gross bond funding for the year, around 4 percentage points ahead the corresponding period in 2022, Barclays said.
Among the larger issuers, Spain and Italy stand out as particularly well-funded-around 8 percentage points and 6 percentage points ahead in terms of gross bond funding, respectively, Barclays added.
"Given this funding progress, as well as healthy redemption flows over the remainder of the year, we project negative peripheral net supply through year-end."
Germany and France, meanwhile, have comparatively heavier net supply in the remainder of the year. All else equal, this should support 10-year Spain versus France tightener trade, Barclays said.
Read Ten-Year Bunds at Around 2.50% Yield Seen as Entry Opportunity
Energy:
Oil prices rose and were on course for a fourth weekly gain thanks to tightening supplies.
Saudi Arabia's and Russia's supply cuts are beginning to bite on global oil balances and have overcome fears about China's sluggish economy.
"Evidence of supply cuts from Saudi Arabia and Russia have been the trigger for the rebound in prices this month," ANZ said. "That tightness in supply is already showing up in inventories."
Metals:
Base metals and gold prices pushed higher as a weaker dollar and reports of Chinese government support for real estate and the auto market helped boost demand.
"There is increasing optimism that the Chinese Communist Politburo meeting due to take place over the next several days could unveil new stimulus measures, in which case we could see further gains materialize in the metals space," Commodity Research Group said.
DOW JONES NEWSPLUS
EMEA HEADLINES
UK Retail Sales Rose More Than Expected in June on Start of Summer Discount Season - Update
U.K. retail sales rose more than expected in June, driven by both food and nonfood purchases, after the start of summer promotional season increased footfall.
Retail-sales volumes ticked up 0.7% on month, higher than the downwardly revised increase of 0.1% in May, data from the Office for National Statistics showed Friday.
UK Consumer Confidence Slid Backward in July as Tough Economy Takes Its Toll
Confidence among U.K. consumers fell back sharply in July after months of improvement as inflation and high interest rates began to put a squeeze on spending, according to a survey published Friday.
Consumer confidence slid six points to minus 30 this month from minus 24 in June, according to the index compiled by consumer-research firm GfK, breaking five straight months of improving sentiment. This was worse than the minus 26 expected by economists, according to a Wall Street Journal poll.
SAP Shares Slump After Cloud Business Growth Disappoints
Shares of German business-software company SAP plunged in Friday morning trading after the group posted cloud revenue growth below analysts' expectations for the second quarter, prompting SAP to cut its cloud revenue projection for the year.
At 0725 GMT, SAP shares traded 5.2% lower at EUR119.88.
Thales Shares Slip After Narrowing Sales Growth Guidance
Shares of French aerospace-and-defense company Thales fell in Friday morning trading after the group narrowed its sales growth guidance for the year, leading to lower projections due to recent exchange-rate moves.
At 0830 GMT, Thales shares traded 4.5% lower at EUR133.85.
Glencore Backs Full-Year View After 1H Copper Production Slipped but Met Expectations
Glencore on Friday backed its full-year guidance after copper production slipped but largely met expectations in the first half of the year, with falls in zinc and nickel output and increases in cobalt and gold production.
The Anglo-Swiss commodity mining and trading produced 488,000 metric tons of copper in the half-year, a 4.4% decline from 510,200 tons in the first half of 2022, consistent with the company's expectations around mining sequences at Collahuasi and Antamina mines in South America, and lower copper by-products outside the copper department, it said.
GLOBAL NEWS
Untangling the U.S. From China's Economy Is Messy
HANOI, Vietnam-The Biden administration's attempt to surgically cut economic ties with China is proving difficult to execute.
Treasury Secretary Janet Yellen visited Vietnam this week to discuss her push for "friendshoring," a term she uses to call for companies to shift supply chains from China to friendlier nations. Trade between the U.S. and Vietnam has exploded in the last five years, reaching roughly $140 billion in 2022 from $60 billion in 2018.
Americans Feel Better About the Economy. Should We Believe Them?
A pair of optimistic headlines in recent weeks suggest consumers are beginning to shrug off higher interest rates, the inflationary surge and recession fears-and feeling confident again about the economy.
The Conference Board, a business-research nonprofit, reported its measure of consumer confidence in June climbed to its highest level since January 2022. The latest reading last week from the University of Michigan's index of consumer sentiment was the highest since September 2021.
Big Regional Banks Reported Stable Deposits. For Investors, That Counts as Great News.
Many investors entered the second-quarter earnings season expecting the worst for regional banks. But that didn't materialize in the results released this week-at least not for the bigger players.
Many banks, including KeyCorp, Western Alliance Bancorp and Zions Bancorp, posted sharp profit declines. But their deposits were stable or higher compared with the first quarter, a relief after customers yanked their money earlier this year across the industry. Other regional lenders including Citizens Financial Group and M&T also posted higher deposits over the quarter.
Where Is Kamala Harris?
Vice President Kamala Harris planned to campaign extensively for President Biden's re-election, but her early schedule suggests otherwise.
In the 10 weeks following Biden's campaign launch, the vice president has traveled to nine states-three of them considered battlegrounds in the 2024 election-and appeared at seven fundraisers, according to her calendar.
U.S. Ambassador to China Hacked in China-Linked Spying Operation
Hackers linked to Beijing accessed the email account of the U.S. ambassador to China, Nicholas Burns, in an attack that is believed to have compromised at least hundreds of thousands of individual U.S. government emails, according to people familiar with the matter.
(MORE TO FOLLOW) Dow Jones Newswires
07-21-23 0610ET
