MARKET WRAPS
Stocks:
European stocks were mixed on Tuesday, with China's latest economic support package offering some support, while further growth in average U.K. earnings suggested more policy tightening by the Bank of England.
While the Stoxx Europe 600 index was higher for a third consecutive day, the FTSE 100 edged into the red following the jobs and wages data, with analysts saying the U.K. government and the BOE "will be chilled by signs of rapid wage growth" as they struggle to bring down stubbornly high inflation.
Track reactions to the data here .
Stocks to Watch
Henkel is expected to report 3% organic sales growth in the second quarter, which should be driven by higher pricing amid a decline in volumes, Jefferies said. Read more.
Ryanair's first quarter update is expected to feature management highlighting continuing concerns over air-traffic-control strikes, the sustainability of demand into next year, fuel-price uncertainty, and its complete lack of visibility for this summer, but isn't expected to issue any profit guidance, Goodbody said. Read more.
U.S. Markets: Markets:
Stock futures struggled for direction as traders looked ahead to inflation data and the start of earnings season later this week.
Investors don't expect softening inflation to stymie interest-rate hikes in the near term. Traders currently forecast rates will finish 2023 around 5.37%, according to Tradeweb.
On Monday, the Federal Reserve's Loretta Mester and Mary Daly both said they expect tighter monetary policy will be needed to bring inflation down to the central bank's 2% target.
Stocks to Watch
https://urldefense.com/v3/__http://Amazon.com__;!!F0Stn7g!Fcxbctoi6gqS0pCUZRRTCiG4VFSHojk0Cm-OZs0QFNtAPWKY-wFHQsYMX6KNAjU3kUE9Ea7UKYsjf-aHl4lQHEkdplnCQnzxL-DNpZRYtHs$ was up 0.4% in premarket trading as it kicked off Prime Day. Amazon stock historically performs better following the end of Prime Day events, according to Dow Jones Market Data.
Iovance Biotherapeutics was down 11% in premarket trading after the company, a developer of novel cancer immunotherapies, said it was planning a $150 million underwritten public offering of common shares
Uber was down 0.3% following a report from Bloomberg that said CFO Nelson Chai was planning to leave the ride-hailing company.
WD-40 reported fiscal third-quarter earnings and sales that rose from a year earlier and beat analysts' expectations. The company also reiterated its fiscal-year guidance. The stock was up 4% in premarket trading
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Forex:
Sterling rose to its highest in nearly 15 months against the dollar, after U.K. data showed wage growth rising even as unemployment edged up, likely leaving the BOE inclined to keep raising rates.
"These are not figures the BOE will want to see and will maintain the market's exceptionally aggressive pricing of the Bank Rate up near 6.40% early next year," ING said.
This leaves GBP/USD looking likely to rise to 1.30 against a backdrop of a weak dollar while EUR/GBP could fall to 0.8520, ING said.
Meantime, the dollar fell to a two-month low against the euro and a basket of currencies as U.S. interest rates look likely to rise less than rates outside of the U.S., ING said.
"There has not been too much data but the push factor of the Fed/U.S. interest-rate story versus the pull factor of overseas asset markets is slightly working against the dollar," ING said.
It pointed to the New York Fed consumer inflation expectations survey, which showed short-term expectations at their lowest since April 2021.
Read USD/JPY's June High Likely a Top for Now; Retreat May Extend
Bonds:
The narrowing of the 10-year Italian BTP-German Bund spread in June happened too fast and some correction was to be expected, Mizuho said.
"We now look for the 10Y BTP-Bund spread to trade around 175-180 basis points through the third quarter, before the next round of rating reviews takes place."
Two-year German Schatz yields correctly reflect market expectations for the European Central Bank's policy rates, Natixis said.
"Consistent with expectations for monetary policy, the yield for the two-year Schatz put on 4 basis points to 3.30% [on Monday], at its highest since March."
Read Spanish Elections Could Be Positive for Spanish Government Bonds
Energy:
Oil prices ticked higher, buoyed by hopes that China will provide more support to its property sector.
Chinese efforts to support its property developers have lifted prices with state run media suggesting Tuesday that more such measures were to come. Read more.
The focus this week will be on U.S. CPI data due on Wednesday, followed by the OPEC and IEA reports on Thursday.
Metals:
Base metals and gold moved higher on the China support measures and with a weaker dollar providing a tailwind.
DOW JONES NEWSPLUS
EMEA HEADLINES
UK Wage Growth Stays High Despite Rising Jobless Rate in The Three Months to May
The U.K.'s jobless rate rose in the three months to May but wage growth maintained its rapid pace, keeping pressure on the Bank of England to raise already high interest rates as it strives to bring down inflation.
The unemployment rate stood at 4% in the period, according to data from the Office for National Statistics published Tuesday, climbing from 3.8% the previous month and above economists' forecasts in a poll by The Wall Street Journal.
German Economic Outlook Weakened in July as Interest Rates Bite
Germany's economic outlook worsened in July by more than expected, as rising interest rates continue to add to a bleak outlook for the eurozone's largest economy.
The ZEW institute's index of economic sentiment for Germany fell to minus 14.7 in July from minus 8.5 in June, it said Tuesday.
German Inflation Rate Rebounded in June, Confirming Prior Estimates
German inflation rose in June after falling for three months in a row, confirming preliminary estimates, as the core rate rose, driven higher by base effects from transport subsidies in 2022.
The consumer price index-which measures what consumers pay for goods and services-increased 6.4% in June compared with the same month a year earlier, according to data from the German Federal Statistics Office Destatis released Tuesday, in line with forecasts by economists polled by The Wall Street Journal. In May, prices rose 6.1% on year.
Daimler Truck to Start $2.2 Bln Share Buyback; Raises 2023 Revenue Guidance
Daimler Truck Holding increased its full-year group and industrial business revenue guidance late on Monday and said that it would start an up to 2 billion euro ($2.20 billion) share buyback in August.
The German truck maker said the group's industrial business revenue is now expected between EUR54 billion and EUR56 billion, up from between EUR53 billion and EUR55 billion previously, and it increased its adjusted return on sales guidance for the segment to a range of 8.5% to 10% from 7.5% to 9%.
Turkey Agrees to Allow Sweden to Join NATO
Turkey approved Sweden's bid to join the North Atlantic Treaty Organization, paving the way for the alliance to complete a historic expansion launched in response to Russia's invasion of Ukraine.
The agreement was reached in the final hours before a NATO summit in the Lithuanian capital of Vilnius on Tuesday, potentially allowing NATO to expand across more than a thousand miles of territory straddling the Baltic Sea, shifting the balance of power in Northern Europe and creating a potential chokepoint for Russian warships and aircraft in the region. It allows NATO to enter its annual summit having ironed out major differences, projecting unity in the face of Russian aggression.
GLOBAL NEWS
China's Reopening Trade Is Fizzling Out
Soft Chinese growth and flaring geopolitical tensions represent fresh hurdles for U.S. investors betting on a boom from the reopening of the world's second-largest economy.
Data on Monday showed China's consumer price inflation was flat in June, marking a 28-month low and sparking fears of deflation. Meanwhile, U.S. Treasury Secretary Janet Yellen just concluded a visit to China where she attempted to stabilize a deteriorating relationship between the countries.
Is China Mired in a 'Balance Sheet Recession?'
China's housing market is weakening again. But as worrying as that is for the nation's growth, it may be a symptom of a much larger, thornier problem.
After a rebound at the beginning of the year in the wake of China's reopening, the country's property market has resumed its downward trend: Both sales and prices have started to fall again.
Chinese Developers Advance After Beijing Extends Support for Property Sector
Shares of Chinese developers rose Tuesday following Chinese authorities' announcement of new loan-relief measures for the embattled real-estate sector.
Hong Kong-listed Country Garden Holdings and Longfor Group Holdings advanced as much as 6.7% and 5.4%, respectively, though their gains were quickly pared as some analysts expect the impact of the new measures could be limited.
Cleveland Fed's Loretta Mester Sees Need for Tighter Monetary Policy
The president of the Federal Reserve Bank of Cleveland said inflation in core goods and services remains high and tighter monetary policy will be needed to bring inflation down to the central bank's 2% target.
"Influencing my view is that inflation has surprised us on the upside for some time," Loretta Mester said Monday at an event in San Diego. "I believe a somewhat tighter policy stance will help achieve a better balance between the risks of tightening too much against the risks of tightening too little."
Donald Trump Asks Court to Delay Trial in Classified-Documents Case
Donald Trump's legal team asked a federal court in Florida late Monday to delay the former president's criminal trial over his handling of classified documents after he left office, saying it wants time to review the inquiry that led to his indictment.
(MORE TO FOLLOW) Dow Jones Newswires
07-11-23 0550ET
