MARKET WRAPS

Stocks:

European stocks rose as investors await the Bank of England policy statement.

Investors are watching to see if the BOE nudges up interest rates when it releases its policy statement. Speculation over the possibility of its first rate increase in three years has intensified in recent weeks after Gov. Andrew Bailey warned on Oct. 17 that the central bank "will have to act" if surging prices for goods and energy push up Britons' expectations of future inflation.

Meanwhile, Norges Bank's decision to leave the rate at 0.25% was expected after it all but confirmed in September that it would wait until December before hiking rates again, said Capital Economics.

Norwegian policymakers reiterated that they will most likely resume the tightening cycle in December. "Norges Bank is all but certain to raise its policy rate by 25bp, to +0.50%, in December, and we expect it to hike once per quarter next year which would take the rate back to the pre-pandemic level of 1.50% by the end of 2022."

In contrast, investors are currently expecting the bank to lift the rate to about 1.25% over the same period, Capital Economics said.

Even with the reduction in the Fed's pandemic-driven stimulus, investors say the bond-buying program and low interest rates will support stocks. Fed Chairman Jerome Powell played down the prospect of an imminent turn to raising interest rates Wednesday.

"This liquidity being pumped into the market is the single most powerful force on earth," said Hani Redha, a portfolio manager at PineBridge Investments. "And yes, yesterday we got an announcement that the force is going to get weaker but even then you still have this force that is lifting the market."

Shares on the move:

Société Générale shares rose 2.6% in Paris trading after the bank posted profit ahead of expectations and replaced its chief financial officer, as it prepares to launch a buyback program. Commerzbank shares added more than 6% in German trading after posting results that beat analysts' estimates.

Shares in Deutsche Post were trading higher after the German freight-and-logistics company reported full third-quarter figures and increased its guidance for 2021 and 2023.

"Our business continued to develop extremely positively in the third quarter of 2021," said Deutsche Post Chief Executive Officer Frank Appel in the earnings statement. On the back of what the company called "continued very positive development of revenue and earnings," Deutsche Post raised full-year expectations for earnings before interest and taxes to more than EUR7.7 billion in 2021 from a previous target of more than EUR7.0 billion. Deutsche Post traded up 2.6%.

U.S. Markets:

Stock futures edged higher ahead of another spate of earnings and fresh economic data.

A strong earnings season so far has shown strong demand for companies' products and services, curtailing worries that higher prices could reduce Americans' spending.

Companies including Moderna, ViacomCBS and Kellogg are set to report quarterly results before the opening bell. Airbnb, Square, Uber Technologies and Peloton Interactive are slated to post earnings after markets close.

Retail trader favorite Bed Bath & Beyond saw shares add 2.9% in premarket trading, building on Wednesday's jump as individual investors' appetite for risk taking grows. Shares of Express and Naked Brand Group, stocks that benefited earlier this year from a surge in individual investing, each rose less than 2% premarket.

Fresh figures on the number of Americans who applied for first-time unemployment benefits in the week ended Oct. 30 are due out at 8:30 a.m. ET. Claims have fallen over the past few weeks as the labor market has tightened.

Forex:

The dollar rose after the Fed announced plans to taper asset purchases, as expected, but offered few clues on prospects for interest rates rising, only that the central bank would stay flexible. This leaves focus on upcoming data, including monthly non-farm payrolls data Friday.

With recent signs of a strong U.S. economy, the dollar could be poised to rise, said ING. "The story of how pent-up demand releases itself over coming months and quarters should be a positive one for the dollar," it said.

Meanwhile the Fed has started policy normalization which should eventually lead to tighter dollar liquidity, higher U.S. rates and a stronger dollar, ING said.

The Bank of England is expected to raise interest rates by 15 basis points later but sterling could weaken if fewer than eight of the nine-member Monetary Policy Committee back the move, ING said.

EUR/GBP could rise to 0.8535 on Thursday, although a BOE rate rise well before the Federal Reserve would "tee up GBP for further gains over coming months as U.K. inflation pressures continue to build," ING analysts said. "Our team does not see U.K. inflation peaking until next April at around 4.5/5.0%."

The Norwegian krone fell against the euro after the Norges Bank left its benchmark interest rate at 0.25% and repeated plans to raise the rate in December but said policy tightening will be gradual.

The central bank said a normalising economy suggests that it will be appropriate to raise the policy rate further after September's increase but uncertainty surrounding the effects of higher interest rates warrants a gradual rise.

Bonds:

The Fed's clear communication has a calming effect on the capital markets, with bond and currency markets unchanged immediately after Wednesday's statements and stock markets reacting positively, said AXA Investment Managers.

"The U.S. central bank communication is almost exactly in line with our assessment," said Achim Stranz, chief investment officer at AXA IM Germany. AXA IM sticks to its policy of overweighting equities against the backdrop of positive corporate earnings reports, while it prefers a rather more defensive short duration in fixed-income securities, he said.

Eurozone government bond yields dropped, led by Italy, after the Fed announcement. Signals that the Fed isn't in hurry to raise interest rates might spark the market to scale back expectations of an early interest rate rise by the European Central Bank, too, still priced for late 2022, analysts said.

Eurozone core and semicore 10-year government bond yields were trading lower.

An abrupt change of course in the ECB's policy is unlikely because the central bank cannot afford to jeopardize financial-market stability, said DZ Bank analyst Daniel Lenz.

"A 'cold turkey' withdrawal from the sweet drug of asset purchases might possibly have unforeseeable consequences for markets, and therefore for the ability of states to refinance themselves, but also for the post-coronavirus economic recovery," he said. The ECB will be able to reduce asset purchases only slowly, he said.

Commodities:

Oil prices rebounded in early European action ahead of the OPEC+ meeting later, although analysts expect no change to the cartel's production increases.

After bearish API data late Tuesday, the EIA released similarly downbeat crude inventory data. Similarly, talks between Iran and Western nations are set to resume at the end of the month, with "the prospect, however remote, of a rush of Iranian crude" prompting a selloff in oil markets, said Oanda's Jeffrey Halley.

Gold prices gained in European trade. Gold's initial Wednesday "selloff occurred prior to the Fed statement and we deduced from this that traders were expecting a much more hawkish statement than what they eventually got," said Ed Meir, a metals consultant at ED&F Man.

EMEA HEADLINES

Credit Suisse Revamps Business in Post-Archegos Overhaul

Credit Suisse Group AG said it would exit most hedge-fund financing and restructure its sprawling operations after deep financial losses and regulatory penalties.

The Swiss bank said Thursday its central mission will be catering to the world's rich with private banking and wealth management. That flagship business, currently managed across geographic units, will sit under one roof and invest for growth with new hires and a target to boost assets to around $1.2 trillion by 2024, from under $1 trillion now.

Talking Markets: UK Bond Investors Brace For First Post-Pandemic Rate Rise

Markets look convinced that the Bank of England will this Thursday become the first major central bank to raise borrowing costs since the pandemic started.

Bond portfolio managers say if the BOE fails to deliver on this expectation then short-dated U.K. government bonds, or gilts, will rally, causing yields to fall.

Societe Generale 3Q Profit Beat Forecasts; Replaces CFO

Societe Generale SA posted profit ahead of expectations on higher revenue in the third quarter, and replaced its chief financial officer as it prepares to launch a buyback program.

The French bank said Thursday that net profit climbed to 1.60 billion euros ($1.86 billion) from EUR862 million in the third quarter last year, with underlying profit up to EUR1.39 billion from EUR742 million.

German Manufacturing Orders Rebounded in September

German manufacturing orders rose in September, swinging from a sharp fall registered in August, amid continuing supply-chain disruptions that curtail factory activity.

Manufacturing orders increased 1.3% on month in September in adjusted terms, following a revised 8.8% fall in August, according to data from federal statistics office Destatis released Thursday.

Norges Bank Keeps Rate at 0.25%, Still Sees December Hike

Norway's central bank on Thursday kept its key policy rate unchanged at 0.25%, as expected, and reiterated that a further hike is likely later this year.

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 while suggesting a further raise would come in December.

Siemens Healthineers Reports Increased 4Q Profit, Sets FY 2022 Targets

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11-04-21 0731ET