European Midday Briefing : Stocks, Commodities Gain on Fresh China Policy Support

MARKET WRAPS

Stocks:

European equities moved higher on Monday as gold and copper futures traded around records, boosting commodity stocks.

"Fresh Chinese stimulus measures aiming to address the country's heavily bleeding property market, and the latest--and better-than-expected--rebound in Chinese industrial production also support the rally in commodity prices," Swissquote Bank said.

Stocks to Watch

Richemont looks set to benefit from an attractive growth path in jewelry, Bryan Garnier Research said.

"We continue to favor Richemont as growth prospects in jewelry remain promising," Bryan Garnier Research said, noting that the luxury goods group's current valuation doesn't fully reflect the quality of the business.

U.S. Markets:

Stock futures edged up along with Treasury yields.

Nvidia was 1.1% higher. The company is scheduled to report quarterly earnings on Wednesday after the stock market closes and is expected to confirm huge demand for its chips to power AI systems.

Forex:

Sterling is likely to strengthen in the short-term if the U.K. services inflation data due on Wednesday beats market expectations, Monex Europe said.

"An overshoot, [in U.K. services inflation] would likely see August become the base case for a [Bank of England] first cut to its bank rate, keeping sterling bid in the short term."

Nonetheless, a reading in line with market expectations or below the expectations is likely to support a BOE cut in June, weighing on sterling, Monex added.

Bonds:

Gilt yields rose modestly with investors looking ahead to Wednesday's U.K. inflation data.

The annual headline inflation for April is likely to decline below 3% from 3.2% in March, with investors having already priced in the deceleration, Mizuho said, adding the focus is likely to be on the core and services prints.

"We note that gilt outperformance versus Bunds has been impressive, and likely a bit overextended," Mizuho said.

Energy:

Oil futures edged higher with the market awaiting OPEC's next move, with three possible scenarios for the June 1 meeting-extend, unwind or completely remove the voluntary cuts of 2.2 million barrels a day.

Prices have traded in less than a $3.50 range since early May, and more clarity might be needed from OPEC+ and its output policy for the second half of the year to provide any impetus to the market for it to break out of its recent range, ING said.

Metals:

Gold futures were just shy of their recent record as softer U.S. data last week raised expectations of Fed interest rate cuts.

Markets are pricing in around an 85% chance of a Fed rate cut by September, compared with around 75% prior to the release of the CPI data, Commonwealth Bank of Australia said.

EMEA HEADLINES

Keywords Studios Shares Have Best Ever Day After EQT Takeover Talks

Keywords Studios' shares rose in early trade after the company said that it is in talks with European private equity company EQT Group over a potential 2.03 billion pound ($2.58 billion) takeover, which would make it the latest in a series of companies to leave the London Exchange if the deal goes ahead.

Shares at 0739 GMT were up 904.0 pence, or 62%, at 2,374.00 pence, marking their best ever rise since the company floated on the London Stock Exchange in June 2013 at 123 pence.

Ryanair to Buyback Shares After Earnings Rise

Ryanair Holdings plans to buyback 700 million euros ($760.9 million) worth of shares after a rise in earnings, and said that it expects passenger numbers to increase this year depending on how well Boeing handles its delivery delays.

The Irish low-cost carrier said that it expected its passenger numbers to grow 8%, or to 198 million to 200 million passengers, but that this growth would be subject to Boeing deliveries returning to contracted levels. Ryanair said it was still short 23 Boeing planes.

AstraZeneca Plans $1.5 Billion Manufacturing Facility In Singapore

AstraZeneca is planning to build a $1.5 billion manufacturing facility in Singapore to boost its global supply of cancer-killing treatments.

The Anglo-Swedish pharmaceutical giant said Monday that the planned greenfield facility will be its first end-to-end production site for antibody drug conjugates. The facility will incorporate all steps of the manufacturing process at a commercial scale, and be operationally ready by 2029.

GLOBAL NEWS

China Benchmark Lending Rates Held Steady

China's benchmark lending rates were held steady this month, central bank data showed Monday after Beijing announced bold moves to address property-sector malaise.

The one-year loan prime rate was steady at 3.45% while the five-year rate was unchanged at 3.95%, according to the official data.

China Hints at Possible Retaliation Against EU Probes

China hinted at potential retaliation in response to the European Union's investigations into Chinese companies, and launched a probe into chemical imports.

The Chinese commerce ministry on Sunday launched an antidumping probe into imports of polyoxymethylene copolymer-a widely used plastic in auto parts and electronics-from the U.S., the EU, Japan and Taiwan. The investigation is expected to complete in a year but could be extended for six months, the ministry said.

Iranian President, Foreign Minister Killed in Helicopter Crash

Iranian President Ebrahim Raisi was killed in a helicopter crash on Sunday, according to state-run Press TV, depriving Supreme Leader Ayatollah Ali Khamenei of a longtime ally as Tehran angles for regional dominance through armed militias that are fighting the U.S. and Israel.

Raisi's death was announced early Monday, after state TV reported Sunday afternoon that a helicopter carrying him and Foreign Minister Hossein Amir-Abdollahian had made a "difficult landing" in northwestern Iran.

Europe Sees Signs of Russian Sabotage but Hesitates to Blame Kremlin

European investigators increasingly see Russian fingerprints around recent acts of suspected sabotage on strategic infrastructure but are struggling to respond.

Reacting to clandestine threats is difficult because evidence around the suspected attacks-including a severed undersea gas pipeline, cuts in a vital internet connection and the disruption of a rail network-often isn't conclusive. Potential culprits in big cases include commercial shipping or fishing vessels that have been engaged in apparently legitimate maritime transport or trawling for fish near sensitive seabed installations that were destroyed around the same time. They rarely have direct connections to Russian authorities, investigators say.

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

05-20-24 0524ET