MARKET WRAPS
Stocks:
European stocks made modest gains on Thursday with tech recovering some losses, helped by an upbeat earnings report from Taiwan's TSMC.
The European Central Bank is expected to keep its key policy rates unchanged at Thursday's meeting, with investors likely to focus on any hints about when it will reduce rates again.
Analysts expect the central bank will leave open the possibility of another rate cut in September but won't offer clear guidance, instead emphasizing that upcoming data will need to provide evidence of slowing inflation before it can act.
"The fact that we got a rate cut from the ECB in June pushed back expectations of another cut to September, especially as Christine Lagarde hinted at taking it slow," Capital.com said.
"Most of the Governing Council members seem to be happy with the current market expectation of two more rate cuts this year."
Stocks to Watch
The reaction to Scor's profit warning looks overdone, Berenberg said, adding that the market seems to be pricing in the worst case scenario, including the company having to raise equity in the second half, which is unlikely. However, Berenberg cut its rating on the stock to hold from buy and trimmed its target price to EUR24 from EUR37.
U.S. Markets:
Nasdaq-100 futures gained after Nvidia, Meta Platforms and other highflying tech shares plunged on Wednesday.
The earnings flurry will continue with results due from Netflix, as well as Abbott Laboratories and Blackstone.
Traders have been rapidly rejiggering their bets on the stock market's winners and losers over the past week. Many have trimmed this year's biggest gainers and piled into beaten-down smaller companies.
Forex:
The dollar remained weak, having hit a 17-week low against a basket of currencies on Wednesday, as investors turned their focus to the likelihood of the Fed cutting rates in September, while the boost from prospects of Donald Trump winning the presidency faded.
"A full conviction that the Fed will start cutting interest rates in September support the negative dollar outlook," Swissquote Bank said, adding the DXY dollar index has dropped below key support levels and now has potential to weaken further.
With the European Central Bank likely to keep interest rates unchanged later Thursday, DZ Bank Research expects a quiet day for the euro, which has appreciated around 2.5% against the dollar so far this month.
The yen has been recovering against the dollar after recently sliding to multi-year lows, helped by growing confidence the Fed is moving closer to cutting rates as well as intervention by Japanese authorities, MUFG said.
The yen is also likely benefiting from elevated short yen positions being pared back ahead of the Bank of Japan's policy meeting at the end of this month, MUFG said.
Bonds:
Government bond auctions in Spain and France on Thursday come during a calmer summer market, and their supply is unlikely to derail the underlying constructive trend, Commerzbank Research said. Against this backdrop, Commerzbank Research maintains a long bias in German Bunds.
Demand for the Treasury's $13 billion auction of 20-year bonds on Wednesday slowed from the previous auction, which had particularly strong statistics, but the underlying details remained robust, Morgan Stanley Research said.
Energy:
Oil extended its gains, boosted by healthy demand signals from the U.S. and after prospects of looser monetary policy weakened the dollar.
Still, bullish sentiment is tempered by a build in U.S. road-fuel stockpiles, with gasoline and distillate inventories rising by 3.3 million barrels and 3.5 million barrels, respectively, and persistent concerns over growth in China.
Metals:
Gold futures rose, consolidating just below their recent record high on growing hopes the Fed will soon start easing monetary policy.
EMEA HEADLINES
U.K. Wages Ease in Encouragement for Bank of England
Wage rises in the U.K. cooled in the three months to May, after months of stubbornly high growth, keeping an August interest-rate cut in play at the Bank of England.
Average earnings, excluding bonuses, between March and May were 5.7% higher than a year earlier, down from 6.0% in the three months to April, according to data from the Office for National Statistics published Thursday. The reading, the lowest rate since September 2022, matched a consensus of economists polled by The Wall Street Journal.
Nokia Cuts Sales Guidance as Market Uncertainty Continues
Nokia cut its full-year sales expectations as the market remains uncertain, with telecom operators continuing to hold back on investing in new network equipment.
The Finnish telecommunications company doesn't provide specific group sales guidance but instead offers sales growth assumptions across its business units, which are all now seen at a weaker level than earlier as the expected net sales recovery is happening later than previously hoped.
Publicis Raises Guidance After Revenue Growth Beats Expectations
Paris-based advertising giant Publicis Groupe raised its full-year guidance after it reported organic revenue growth for the second quarter that beat analysts' expectations, fueled by gains in market share.
The world's largest ad group by market capitalization said Thursday that it now expects organic net revenue growth of between 5% and 6% for the year as a whole, up from its previous guidance of 4% to 5%. Analysts projected full-year organic growth of 4.9%, according to consensus estimates provided by Visible Alpha.
Novartis Raises Profit Guidance as Key Drugs Boost Sales
Novartis raised its profit guidance a second time this year after second-quarter profit and sales rose and outpaced analysts' expectations, boosted by revenue from its blockbuster treatments.
The Swiss pharma major said Thursday that it now expects its core operating profit-one of its preferred metrics, which strips out exceptional items-for 2024 to grow in the mid to high teens, from a low double-digit to mid-teens range previously.
ABB Posts Higher Profit, Reaffirms Outlook
ABB reported a rise in second-quarter profit, helped by momentum in the electrification division that is benefiting from strong demand from data centers and infrastructure.
The Swiss industrial-technology company on Thursday said second-quarter net profit rose to $1.10 billion from $906 million in the prior year, on revenue that grew 4% on a comparable basis to $8.24 billion.
Telenor Lifts Service Revenue Guidance, Backs Other Targets, After Profit Rises
Telenor raised its full-year organic growth guidance for Nordic service revenue, and backed the rest of its targets, after net profit rose in the second quarter.
The Norwegian telecommunications provider said Thursday that net profit rose to 2.54 billion kroner ($236.9 million) from NOK821 million for the same period a year earlier. This beat market consensus of NOK2.47 billion, based on six analysts' forecasts taken from FactSet.
Telia Co Backs Guidance After Earnings Beat Market Views
Telia Co. reported second-quarter earnings that beat market views, and backed its full-year guidance.
The Swedish telecommunications operator said Thursday that total net profit attributable to shareholders for the quarter was 4.53 billion kronor ($429.8 million) compared with SEK2.32 billion for the same period a year earlier and a consensus of SEK1.485 billion, taken from the company's website.
Volvo Car's Shares Rise on Earnings Growth, But Warns of Sales Hit From EU Duty on Chinese EVs
Volvo Car shares rose on Thursday early trading after the group posted record growth in core earnings for the quarter, but warned that potential tariffs from the EU on electric vehicles from China will hit sales of one of its flagship cars.
Shares at 0733 GMT were up 5.4% to SEK33.87, returning to price levels seen in the beginning of June. The announcement of the tariffs on July 4 prompted shares to drop 6.2%.
Truck Maker Volvo's Earnings Beat Forecasts on Sustained Demand
Volvo AB posted forecast-beating second-quarter earnings as demand in many markets continued to normalize compared with the high levels of 2023.
The Swedish truck maker said Thursday that truck deliveries fell 8% to 58,935 trucks in the quarter and order intake was flat at 47,760 vehicles.
Airbus Has Some Supply-Chain Woes. In the Long Run, They're Just a Blip.
Remember the supply chain? Airbus Chief Executive Guillaume Faury sure does.
Faury should be living in something close to CEO heaven right now. His only serious competitor, Boeing, lurches from crisis to debacle. His order book is full for the next decade.
GLOBAL NEWS
Bank Stocks Celebrate Return of M&A, Ignore the Health of the Consumer
Wall Street is back. Main Street? Not so much. That's the big takeaway after the largest U.S. financial institutions reported this earnings season.
JPMorgan Chase, Citigroup, Wells Fargo, Bank of America, Morgan Stanley, and Goldman Sachs showed investors that one thing is certain: Large transactions are returning. That's enriching dealmakers, driving banks' profits, and pushing their stocks higher.
Prospect of Trump's Return to Dominate European Security Summit
The coming U.S. presidential election, with the growing prospect of a return of Donald Trump to the White House, promises to have profound repercussions for Europe's security, future trans-Atlantic relations and the conflict in Ukraine-changes with which European leaders are starting to grapple.
Trump's pick of Sen. JD Vance (R., Ohio) as his running mate on Monday reinforced a sense in Europe that the former president's return to office could mean a dramatic drop in U.S. aid for Ukraine and a push to force Kyiv into peace talks with the Kremlin. It could also mean a U.S. pivot in defense priorities toward Asia to deter China that would leave Europe to increasingly fend for itself.
(MORE TO FOLLOW) Dow Jones Newswires
07-18-24 0533ET
