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EUROPEAN MIDDAY BRIEFING - Stocks Down After -2-

01/20/2022 | 06:29am EDT

The yield on the 10-year German government bond fell to minus 0.018% Thursday from minus 0.014% Wednesday.

With the yield having risen above 0% on Wednesday, the 10-year German Bund offers some value to investors, ING's rates strategists said. "The zero line is a psychological level where some may see some value again--or at least no penalty--so a breather on the way up would not surprise," they said.

Some relief might also come from the fact that, after Thursday's Spanish and French bond auctions, the eurozone will have passed the peak of the first issuance surge in government bonds, they added.

Italian government bonds, or BTPs, seem "largely priced for a Draghi presidency, but not for the increasing risk of a snap election," said Citi's rates strategists. Italy will hold presidential elections starting on Monday, and Prime Minister Mario Draghi may be elected as Italy's next president.

Still, BTPs aren't immune to further volatility potentially to be caused by the elections, Citi said. "Various scenarios for the Presidential election outcome point to wider spreads still, either immediately or within a few months," the bank's strategist sai9d, maintaining short exposure to BTPs.

The Bank of England is likely to revise up its inflation forecasts, which would push borrowing costs higher, said Mizuho.

Speaking before the U.K.'s Treasury Committee on Wednesday, BOE Governor Andrew Bailey expressed concerns about inflationary pressures becoming more stubborn due to higher energy costs.

"Inflation should still have a few months before peaking, and the BoE is likely sowing the seeds for yet another upward revision of their inflation forecast, which should in turn fuel another hawkish repricing, " analysts at the Japanese bank said. The annual rate of consumer price inflation hit a nearly 30-year high of 5.4% in December.

Commodities:

Oil prices slipped following the release of U.S. oil stats, which showed a stronger-than-expected build in the nation's crude and gasoline inventories. The American Petroleum Institute said Wednesday that crude stockpiles rose by 1.4 million barrels, about 100,000 barrels more than analysts had been expecting.

Gasoline inventories rose by 3.5 million barrels compared to analysts' predictions of a 1.9 million barrel build. Investors and traders will be looking to official data on U.S. crude stocks set to be published by the Department of Energy at 1600 GMT for clues on oil demand.

Gold prices were edging lower a day after jumping to a two-month high. On Wednesday, prices of the precious metal jumped suddenly, gains that coincided with large inflows into the SPDR Gold Shares exchange-traded fund. The gold ETF, the largest of its kind, saw net inflows of $305 million on Wednesday.

That marked the largest daily inflow of money into all gold ETFs tracked by FactSet since November.

Investors have largely shunned such gold funds amid an uncertain outlook for the precious metal. Gold ETFs saw large inflows as gold prices rose to record levels last year. Analysts said gold is threatened by the prospect of interest rate hikes this year but is gaining support from multi-decade high inflation levels.


EMEA HEADLINES

Unilever Walks Away From Glaxo Consumer-Healthcare Deal

Unilever PLC said it wouldn't increase its $68 billion offer for GlaxoSmithKline PLC's consumer-healthcare business, effectively walking away from a potential deal that would have added a raft of drugstore staples to its portfolio.

The announcement Wednesday from the maker of Ben & Jerry's ice cream and Dove soap came after days of criticism from analysts and investors about the price and strategic fit of the proposed transaction. Unilever's shares have fallen sharply this week since news of a possible deal was disclosed over the weekend.


Alstom 3Q Sales, Orders Rose; Backs FY Views

Alstom SA said Thursday that sales and orders rose in its third quarter, while it backed its views for its fiscal year 2022.

The French train maker booked sales of 3.92 billion euros ($4.45 billion) in the October-December period, up from EUR3.71 billion a year earlier, it said. Orders increased to EUR4.58 billion from EUR4.37 billion.


Puma Beat 2021 Targets Despite Pandemic, Supply Issues

Puma SE said Thursday that sales grew strongly in the fourth quarter, helping the German sporting-goods company beat raised targets for the full year as good demand offset supply-chain constraints and pandemic-related disruption.

According to preliminary results, quarterly revenue rose around 14% at constant currency to 1.77 billion euros ($2.01 billion) from EUR1.52 billion in the same period of 2020. Earnings before interest and taxes rose slightly in the quarter to EUR65 million.


Associated British Foods 1Q Revenue Rose Despite Omicron Hit to Primark Sales

Associated British Foods PLC said Thursday that revenue for the first quarter of fiscal 2022 rose on year despite Primark sales declining, and left its full-year guidance unchanged.

The FTSE 100 company said revenue for the 16 weeks ended Jan. 8, increased at constant currency by 19% to 5.57 billion pounds ($7.58 billion) from the same period a year earlier.


Entain Says 4Q Net Gaming Revenue Rose; Narrows 2021 Ebitda Guidance Range

Entain PLC said Thursday that net gaming revenue rose in the fourth quarter, and narrowed earnings guidance range for 2021 as major markets performed well.

The gambling-and-betting company narrowed its guidance range for 2021 earnings before interest, taxes, depreciation and amortization to 875 million to 885 million pounds ($1.19 billion-$1.20 billion). With the release of its third-quarter results on Oct. 12, Entain had reaffirmed guidance for full-year Ebitda of GBP850 million to GBP900 million.


Norges Bank Keeps Key Rate at 0.50%, Still Sees Rise in March

Norway's central bank on Thursday kept its key policy rate at 0.50%, as expected, and reconfirmed that a further hike is likely in March.

In September, Norges Bank became the first major western central bank to raise interest rates since the onset of the Covid-19 pandemic, when it lifted its key rate to 0.25% from zero, and followed that up with a further hike in December to 0.50%.


As Inflation Bites, Power Lies Higher Up the Food Chain

The food companies with the best shot at beating inflation are those that investors are least likely to know.

As costs rise along the global food-supply chain, shoppers are paying more for groceries on both sides of the Atlantic. Britain's food-price inflation hit 4.5% in December 2021 compared with the same month of 2020, according to data released Wednesday by the U.K. Office for National Statistics. In the U.S., prices for food consumed in the home rose 6.5% year over year in December, while the eurozone's measure was up 4.6%.


Deliveroo 2021 Gross Transaction Value Growth Was at Top End of Expectations

Deliveroo PLC said Thursday that its gross transaction value growth in 2021 was at the top end of the guidance range.

The U.K. food-delivery company reported that its full-year GTV rose 70% to 6.63 billion pounds ($9.02 billion), compared with previous expectations of 60%-70%. Total orders were up 73% at 300.6 million.


Aker Offshore Wind Not Planning Capital Increase After Missing Out on Scottish Licenses

Norwegian offshore wind developer Aker Offshore Wind AS said Thursday that it isn't currently planning a capital increase and remains committed to its strategy and to developing its international project portfolio following a leasing round of Scottish waters in which the company didn't secure any project licenses.

"We are of course disappointed at the outcome of the ScotWind process, but remain ardent believers in the potential of floating offshore wind and Aker Offshore Wind's technology and system capabilities to industrialize this segment," said Kristian Rokke, chairman of Aker Offshore Wind and chief executive officer of majority shareholder Aker Horizons AS.


EU Companies Face Fallout From Decision Against Google

European businesses face uncertainty over the use of a popular analytics tool from Google after a regulator found it breached privacy laws, the latest salvo by the European Union against big U.S. tech companies.

The ruling from Austria's data-protection regulator, published last week, could upend business practices for companies across Europe as regulators in the 27 EU countries are also preparing legislation on social-media content. Lawmakers are set to vote this week on a draft of the bill, which includes provisions clamping down on targeted online advertising.


GLOBAL NEWS

Economists Expect Stretch of Low Jobless Claims to Extend Into The New Year

Filings for jobless claims are expected to remain near the lowest levels on record, as workers and businesses contend with a tight U.S. labor market and Omicron-related disruptions.

Initial claims for unemployment benefits, a proxy for layoffs, are estimated to have remained around 225,000 last week, according to economists surveyed by The Wall Street Journal, following an increase for the week ended Jan. 8. The Labor Department will release its report at 8:30 a.m. ET on Thursday.


China-Based Auditors Pose Risks for U.S. Companies, Study Shows

Some 200 Chinese companies are under threat to be booted from U.S. stock exchanges because they use China-based auditors whose work can't be inspected by U.S. regulators. The move is designed to protect U.S. investors, lawmakers say.

More than 130 U.S. companies use these same Chinese auditors for significant parts of their audits, according to research by three accounting professors.


China Cuts Benchmark Rates to Bolster Flagging Economy

BEIJING-China's central bank lowered its benchmark lending rates, stepping in to support a slowing economy that has been weighed down by a slump in the property market during a politically important year for leader Xi Jinping.

(MORE TO FOLLOW) Dow Jones Newswires

01-20-22 0628ET

Stocks mentioned in the article
ChangeLast1st jan.
AKER ASA 2.07% 838 Real-time Quote.-0.48%
AKER HORIZONS ASA -3.16% 20.5 Real-time Quote.-35.94%
AKER OFFSHORE WIND AS -1.64% 2.632 Real-time Quote.-47.22%
AKER SOLUTIONS ASA 0.43% 32.96 Real-time Quote.40.38%
ALPHABET INC. 2.37% 2229.76 Delayed Quote.-24.81%
ALSTOM 1.54% 24.33 Real-time Quote.-23.25%
ASSOCIATED BRITISH FOODS PLC 0.87% 1628 Delayed Quote.-19.62%
AUSTRALIAN DOLLAR / BRITISH POUND (AUD/GBP) -0.11% 0.564 Delayed Quote.4.94%
CANADIAN DOLLAR / BRITISH POUND (CAD/GBP) -0.26% 0.622688 Delayed Quote.6.61%
DELIVEROO PLC -5.01% 88.34 Delayed Quote.-55.65%
ENTAIN PLC 1.14% 1419 Delayed Quote.-16.64%
EURO / BRITISH POUND (EUR/GBP) 0.45% 0.8494 Delayed Quote.0.48%
FTSE 100 1.67% 7513.44 Delayed Quote.0.07%
GLAXOSMITHKLINE PLC 1.02% 1782 Delayed Quote.9.80%
GOLD 0.34% 1852.7 Delayed Quote.0.89%
INDIAN RUPEE / BRITISH POUND (INR/GBP) -0.18% 0.010256 Delayed Quote.3.63%
LONDON BRENT OIL 0.69% 113.34 Delayed Quote.44.68%
ON SEMICONDUCTOR CORPORATION -1.01% 55.89 Delayed Quote.-16.87%
PUMA SE 1.32% 62.9 Delayed Quote.-42.25%
S&P 500 1.86% 3973.75 Real-time Quote.-18.14%
S&P GSCI GOLD INDEX 0.30% 1079.36 Real-time Quote.1.08%
UNILEVER PLC 0.50% 3534 Delayed Quote.-10.87%
US DOLLAR / BRITISH POUND (USD/GBP) -0.63% 0.794761 Delayed Quote.8.35%
WTI 0.36% 110.563 Delayed Quote.44.84%
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