MARKET WRAPS

Stocks:

European stocks retreated on Wednesday as investors weighed some mixed corporate results, with caution dominating markets ahead of this week's European Central Bank policy decision.

The financial sector was under intense pressure, with the fallout from SVB's collapse continuing to take its toll.

Credit Suisse shares fell as much as 17%, hitting a fresh all-time low, reflecting increasing concerns about the bank's struggles to stabilize its operations.

Prices on Credit Suisse bail-in bonds, which get wiped out in case the bank runs into serious trouble, also fell.

Chairman Axel Lehmann said on Wednesday the bank's capital and balance sheet were strong, and that "we are all hands on deck" to tackle problems. He said the prospect of government assistance is "not a topic whatsoever."

Read more here .

Prudential shares fell 8% on concerns about China and the potential for more banking-sector problems.

While the Asia-focused insurer's numbers contained positives, the collapse of SVB is causing investors to treat financial stocks with suspicion, AJ Bell said.

"In the short-term, there are concerns about China both from a political and economic perspective as it continues to clamp down on internal opposition," AJ Bell added.

Stocks to Watch

Expectations for the German and French TV advertising markets in the first quarter have weakened over the last month, UBS said, citing a survey among media buyers.

Forecasts for the German TV ad market in the first quarter range from 2% to 18% falls compared with previous expectations for declines of up to 9%, UBS said. In France, first-quarter TV ad estimates range from a 2% rise to a 5% drop against previous forecasts for growth of 1% to 2%.

Broadcasters ProSiebenSat.1 Media and Television Francaise 1 face tough comparisons in the first quarter due to their strong performance in early 2022, but these should ease throughout the year, UBS added.

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Vinci's airport passenger traffic recovered to 89% of 2019 levels in February, supported by a strong start to the year from Portugal, Jefferies said.

The company said Tuesday that Portuguese traffic increased 54% in February and was 19% higher than 2019 levels. Traffic from Mexican airport group OMA helped offset softer results in Brazil and Chile, Jefferies said.

"Asian airports continue to lag the European and Americas recovery; however, we expect easing restrictions and airline capacity additions to drive further growth through 2023," Jefferies said.

U.S. Markets:

Stock futures were falling ahead of the opening bell.

The main focus on Wednesday is likely to be the U.S. retail sales data for February. Traders will also be keen to see how price pressures are percolating down the supply chain, with the producer price index for February a released at the same time.

Analysts said moves by regulators and officials appeared to have stopped SVB's collapse from spilling over into the broader financial system, stabilizing markets.

Still, they said the ripple effects from the bank's failure were hard to predict, and that SVB might not be the final piece of financial infrastructure to break as the Fed raises rates.

Follow WSJ markets coverage here .

Forex:

The dollar edged higher against a basket of currencies, as the latest U.S. inflation data suggested the Federal Reserve still has work to do to combat rising prices.

"Nonetheless, EUR/USD is consolidating its recovery above 1.07 ahead of the European Central Bank meeting tomorrow as investors remain convinced that there is no major obstacle to the bank delivering another 50 basis points rate hike," Unicredit Research said.

Read ECB Interest-Rate Rise Other Than 50Bps Seen Unlikely

Read ECB Looks Pressured by Fears of Wage-Price Spiral

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U.K. Treasury chief Jeremy Hunt's spring budget at 1230 GMT is likely to prove neutral for sterling, ING said.

"We doubt anything in the budget will be sterling negative--after all taxation levels are near the limit--but equally we do not see it as especially sterling positive either," ING said.

The budget could include measures to improve the cost of living crisis, address labor shortages and incentives on investment.

However, Hunt will probably save more overt fiscal stimulus for the Autumn Statement later this year or next year's budget before the general election later in 2024, ING said.

Read Sterling's Link to Risk Sentiment May be Fading

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The krona rose as Sweden's higher-than-expected inflation data released earlier Wednesday should cement expectations for a 50 basis points interest rate rise at the Riksbank's April 26 meeting, ING said.

EUR/SEK fell 0.6% to a one-week low after the data.

However, "we would be wary of holding the Swedish krona at the current time," ING said. "Ever higher rates in Sweden only stand to heap more pressure on the property sector, on the banks, and on the SEK."

Swedish inflation rose to an annual rate of 12% in February from 11.7% in January, above expectations of 11.7% in a WSJ survey of analysts.

Bonds:

Eurozone government bond yields remained elevated in early trading.

Market pricing of the European Central Bank's interest-rate rise on Thursday was increasing too, recently at 46 basis points, up from around 40bps on Tuesday, according to Refinitiv.

"After Monday's brutal flight to quality, it was probably a case yesterday of markets playing a gradual return to normality," Natixis said.

"For the ECB...markets do not anticipate any cuts in this year, with a 3.5% terminal rate until the end of the year."

Read ECB Expected to See US Bank Woes as US-Specific Issue

Energy:

Oil prices recovered somewhat as global markets stabilized following the fallout from the Silicon Valley Bank's collapse.

However, the gains go a short way to recouping some of Tuesday's heavy losses.

ING said oil markets have had to grapple both with SVB's failure and U.S. CPI in which core inflation was stronger than expected.

"This makes it increasingly difficult to second-guess what the [Fed] may decide to do at its...meeting next week."

Read Fed Likely to Continue Its Interest-Rate Hiking Cycle Despite Banking Woes

Metals:

Base metals were lower despite a rebound in Chinese economic activity during the first two months of the year and China's central bank keeping its policy rates unchanged.

Meantime, gold was down as Treasury yields recovered after a largely in-line U.S. inflation report quelled notions that the Fed could pause rate increases, Oanda said.

However, ANZ said that looking ahead, the market was expecting the Fed to ease its monetary policy stance, which could be reflected in higher commodity prices.

"The impact of [U.S. CPI] inflation data was unclear. The Fed is likely to maintain its tough position on inflation, but it won't want to add further turmoil to the banking sector," ANZ said.

Iron-Ore

Some Chinese steelmakers are being slow in replenishing their iron-ore inventories due to robust prices for the steel ingredient, Macquarie said.

Even though steel margins are improving, some mills are "maintaining low stock levels due to 'unattractive' iron-ore prices," Macquarie said.

Exports from Rio Tinto and BHP have softened recently because of port maintenance works.

DOW JONES NEWSPLUS


EMEA HEADLINES

E.ON to Invest Around $35 Bln in Energy Transition in Coming Years

E.ON SE is planning to invest 33 billion euros ($35.42 billion) in the coming years as it banks on a turbo-charged energy transition in Europe after a challenging year for energy markets marked by the war in Ukraine.

The German energy company said Wednesday that it would leverage more than 95% of the investment until 2027 to meet the European Union's taxonomy's sustainability criteria.


BMW Expects Higher Deliveries in 2023 as It Ramps Up Electric, High-End Vehicles

BMW AG said Wednesday that it expects its automotive deliveries to increase in 2023, driven by a ramp-up in battery electric and high-end vehicles.

The German car maker said it is also targeting an earnings before interest and taxes margin of between 8% and 10% this year for its automotive segment. In 2022, the automotive segment EBIT margin was 8.6%


Inditex Upbeat for Year Ahead as Top-Line Impetus Continues; Plans to Lift 2022 Dividend

Zara-owner Industria de Diseno Textil SA said Wednesday that sales momentum has continued at the beginning of its fiscal year, and that it will pay a higher dividend for its fiscal 2022.

The Spanish fashion group, known as Inditex, posted sales of 9.51 billion euros ($10.21 billion) for the fiscal year's final three months to Jan. 31 compared with EUR8.39 billion in the same period the previous year. This fell just short of analysts' expectations of EUR9.65 billion, according to a FactSet-compiled poll of forecasts.


Prudential's 2022 Operating Profit Rose on Strategic Re-Positioning

Prudential PLC said operating profit rose in 2022, supported by a strategic repositioning to focus solely on Asia and Africa.

The company's annualized premium equivalent sales for the year rose 9% to $4.39 billion, it said Wednesday.


Months after its own financial turmoil, U.K. set to release new budget

In the U.K., the collapse of SVB Financial brought to mind its own financial turmoil about five months ago.

Like U.K. pension funds were in October, SVB's bond portfolio was caught out by the huge rise in interest rates. In both instances, the country's central bank stepped in to backstop their respective financial systems. One key difference was that the U.K. crisis was exacerbated by the use of derivatives, whereas SVB's difficulties stem from a lack of derivatives use.


Russian Jet Collides With U.S. Drone Over Black Sea

A Russian jet struck a U.S. spy drone over the Black Sea and knocked it out of the sky Tuesday, the Pentagon said, in one of the first direct military confrontations between the two nations' forces since the war in Ukraine began more than a year ago.

(MORE TO FOLLOW) Dow Jones Newswires

03-15-23 0701ET