European Midday Briefing: Stocks Struggle as Fresh Data Points Eyed

MARKET WRAPS

Stocks:

Stocks in Europe were lower on Monday as investors looked for fresh direction at the start of another busy week.

After Friday's stronger-than-expected U.S. nonfarm payrolls data eased concerns over an economic slowdown and made it more likely that the Federal Reserve will cut rates by a quarter point rather than half a percentage point at its next meeting, investors will be looking ahead to the release of the September consumer price index on Thursday to reinforce views about where the economy is headed.

Meantime, speculation is rife that China will soon unveil fiscal stimulus , which Morgan Stanley said may be sized at CNY2 trillion. The first batch could come at Tuesday's NDRC press briefing, followed by the finance ministry in the next few weeks.

MS said some foreign investors may view a CNY2 trillion package as underwhelming.

U.S. Markets:

Index futures ticked lower, while benchmark 10-year Treasury yields stood at around 4%.

In addition to Thursday's key inflation readout, this week brings quarterly results from some of the biggest banks including JPMorgan, Wells Fargo, Bank of New York Mellon and BlackRock.

Minutes from the Fed's momentous September meeting are also awaited.

Stocks to watch

Arcadium Lithium shares soared ahead of the opening bell after Rio Tinto confirmed it was in talks to buy the New York-listed lithium producer.

Pfizer shares rose after activist investor Starboard Value took a roughly $1 billion stake and said it wanted the drugmaker to turn its performance around.

Forex:

The dollar traded steady and remained at stronger levels after Friday's better-than-anticipated nonfarm payrolls.

"Looking at the next three weeks, we cannot identify a clear catalyst that can reverse the course for the dollar, and a consolidation of recent dollar gains looks more likely," ING said.

Sterling could fall to $1.3000 in the near-term, given that markets may be more inclined to price in BOE cuts after Bailey's comments last week ING said, adding that it sees a few more upside risks for the dollar.

Bonds:

Investors continue to sell bunds, causing yields to rise further, but this move could soon reverse given recent weak economic data and prospects of further interest-rate cuts, Commerzbank said.

"The latest selloff seems to have gone too fast, too far and we suggest tactical Bund longs to capture the next leg higher in Bunds," adding that this week's German industrial data could underline persistent downside risks to growth.

Energy:

Oil rose as the market awaits new developments in the Middle East, where geopolitical tensions are boiling over, ING said.

Joe Biden is reportedly discouraging Israel from planning a strike on Iran's crude oil facilities in response to Iran's missile attack last week.

According to OPEC's latest market report, Iran has produced around 3.3 million barrels of oil a day, and shortages in the oil market could result from any disruption to this supply, ING added.

Metals:

Gold futures were broadly flat, holding their ground after gains Friday.

The Chinese central bank opted against adding gold to its reserves for a fifth consecutive month in September, having broken an 18-month buying streak in May that had helped drive gold prices to record highs, ING said.

China has experienced a slowdown in gold purchases over recent months, with high prices likely deterring further buying for now, it added.

EMEA HEADLINES

German Factories Fall Further Behind as Orders Sink

German manufacturing orders plunged more than expected in August, adding further gloom to the struggling sector that offers little sign of a recovery.

Orders fell 5.8% on month in August, according to data published Monday by Germany's statistics agency Destatis. That was weaker than economists' expectations for a 2.0% drop, according to a Wall Street Journal poll, and contrasts with an upwardly revised 3.9% increase in July orders.

Shell Expects Higher LNG Output But Flags Continued Refining Weakness

Shell said it expects to report that liquefied natural gas production rose in the third quarter, and that quarterly gas trading was in line with the second quarter's, potentially offsetting continued refining margin weakness.

Europe's top energy company said Monday that it expects its trading result in its core integrated gas unit to be in line with the second quarter's, when the division contributed $2.675 billion in adjusted earnings.

Richemont to Sell YNAP to Mytheresa

Cartier owner Richemont agreed to sell its e-commerce business Yoox Net-A-Porter to luxury online platform Mytheresa in an all-share deal, nearly a year after it scrapped a previous sale of the business to Farfetch.

Richemont said Monday that it expects to book a 1.3 billion-euro ($1.43 billion) hit as a result of the deal, under which it will transfer YNAP with 555 million in cash and no debt to Mytheresa-the German multibrand online luxury shop owned by MYT Netherlands Parent-in exchange for a 33% stake in Mytheresa. Richemont will have the right to nominate a member and an observer to Mytheresa's supervisory board, it said.

Atos to Continue Talks With French State Over Assets Sale

Atos said it made a new proposal to sell its computing and cybersecurity assets to the French state after an initial 700 million-euro ($768.4 million) offer from Paris expired without an agreement.

The beleaguered French IT group received an offer from the French government back in June for its advanced computing, mission-critical systems and cybersecurity products activities within Atos's big data and security arm, underscoring efforts from Paris to prevent the collapse of a company that offers services to governments, homeland security and defense clients.

GLOBAL NEWS

Japan to Closely Watch Impact of Yen Moves on Corporate, Household Activity

TOKYO-Japan's new finance minister pledged to consider policy responses against sharp currency moves based on how they affect the real economy, a comment that comes as growing global economic uncertainties spur volatility in foreign-exchange markets.

"We need to take necessary measures while closely watching the effects [of currency moves] on people's lives and economic activities, rather than responding to the foreign-exchange market itself," Katsunobu Kato said in an interview with Dow Jones Newswires and other media on Monday.

Stock market's soft-landing rally faces CPI inflation test. Here's what investors should do.

The U.S. stock market celebrated the start of the Halloween season with treats.

A blockbuster September jobs report may have paved the way for the economy to score a soft landing as inflation has fallen, but it also forced investors to dial back bets on the Federal Reserve's future interest-rate cuts while pondering whether the central bank made a policy mistake by lowering interest rates by a half-percentage-point last month.

Corporate Insiders Are Sitting Out the 2024 Stock-Market Rally

Stock investors could hardly be more enthusiastic: The S&P 500 has raced higher, notching its best first nine months of a year since 1997.

Yet some of the best-informed investors don't seem to share the optimism.

Trump's Plan Boosts Budget Deficits by $7.5 Trillion, Double Harris's Proposal

WASHINGTON-Donald Trump's flurry of recent tax-cut promises pushed his fiscal plan deep into red ink, and he would increase budget deficits by more than twice as much as Democratic rival Kamala Harris would, according to a new study that is among the most comprehensive estimates to date of the candidates' proposals.

Trump's combination of tax cuts, tariff increases, military expansion and mass deportations would widen budget deficits by an estimated $7.5 trillion over the next decade, according to the Committee for a Responsible Federal Budget, or CRFB, a nonpartisan group that favors lower deficits. Meanwhile, Vice President Harris's plans-social-policy spending, middle-class tax cuts and tax increases on corporations and high-income households-would increase deficits by $3.5 trillion.

Israel Launches New Offensive in Northern Gaza, Orders Mass Evacuation

TEL AVIV-Israel's military said it reopened an offensive in northern Gaza to combat militants who have resurfaced in the area, issuing sweeping evacuation orders after residents reported heavy artillery shelling overnight.

The military said two of its armored brigades encircled part of Jabalia, a longtime Hamas stronghold in northern Gaza in which it has fought several times over the past year, as an infantry division began an operation in the area on Sunday.

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(END) Dow Jones Newswires

October 07, 2024 05:38 ET (09:38 GMT)

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