MARKET WRAPS
Stocks:
European stocks were weaker on Thursday, reversing most of the previous session's gains, as investor worries about the U.S. economy remain.
"Technical indicators began pointing to a tactical European equities recovery earlier this week, and fundamentals remain attractive," Morgan Stanley said.
However, for growth fears to fade more substantively, the market will need evidence of a U.S. soft economic landing, the bank said.
Thursday's weekly jobless claims are in more-than-usual focus, following a string of disappointing economic data that culminated in Friday's jobs report.
"One of the most important events today may well be U.S. initial jobless claims, which have been edging up of late but with a few distortions," Deutsche Bank said.
Stocks to Watch
Nordea's second-quarter report confirmed the shares contain unrealized value, despite a lower interest-rate environment in the coming years, Jyske Bank said.
Capital generation remains strong, and Jyske said Nordea should be able to distribute up to 36% of its market value between 2024 and 2026.
Jyske rates Nordea at buy with a DKK95 price target.
U.S. Markets:
Stock futures pointed to a lower open with sharp moves seen as likely to continue.
Looking Ahead
Economists forecast that unemployment claims totaled 240,000 last week, down from 249,000 the previous week.
Earnings are due early Thursday from Eli Lilly among others, with results season now in its later stages.
Overall, analysts expect profits from S&P 500 companies rose 12% last quarter, up from a forecast for 9% growth at the end of March, according to FactSet.
Forex:
The euro could rise above the key $1.10 level versus the dollar once volatile markets settle, as focus switches to narrowing eurozone-U.S. interest rate differentials, ING said. "That is our bias over the coming months."
Expectations for 81 basis points of European Central Bank rate cuts this year look "far too aggressive" so a potential unwinding of these bets at some stage should provide further EUR/USD support, ING said. It expects 50 basis points of ECB rate cuts this year.
EUR/USD could take another run at 1.10 if U.S. initial jobless claims data at 1230 GMT are higher than expected, ING said.
The dollar was lower as investors exercised caution ahead of the data.
Bonds:
German Bunds have struggled to find direction as risk appetite remains shaky while the underlying dynamics are changing, Commerzbank Research said, adding that the initial jobless claims should receive more attention that usual amid elevated focus on the U.S. labor market.
"Markets seem well-prepared for a higher figure though after the latest labor-market indications."
Commerzbank Research also said Treasury supply remains an issue for markets, as signaled by Wednesday's yield moves. Treasurys bear-steepened before and after the 10-year note auction, affirming existing supply concerns.
"While one should not over-interpret every tick during these volatile summer markets, this price action underscores that the underlying supply concerns have not disappeared."
Energy:
Oil prices were volatile, rapidly swinging from positive to negative territory but staying in a tight range as the market awaits Iran's possible retaliatory strike against Israel.
Metals:
Gold prices edged up, largely steadying after a selloff earlier in the week.
Bullion held by the PBOC at the end of July stood unchanged at 72.8 million troy ounces, according to official data.
The bank ended an 18-month buying spree in May that had driven gold prices to record highs, though those same high prices have likely deterred further purchases for now, ING said.
EMEA HEADLINES
Siemens Posts Higher Net Profit on High Demand in Electrification
Siemens posted higher third-quarter net profit and revenue, as it continues to benefit from high demand for electrical infrastructure driven by data centers and energy customers.
The German industrial giant said Thursday that for the quarter ended June 30 net profit increased to 1.98 billion euros ($2.16 billion) from EUR1.28 billion for the same period of the prior year. Analysts had forecast net profit at EUR1.80 billion, according to consensus estimates provided by Visible Alpha.
Allianz Expands Buyback After Profit Beats Market Expectations
Allianz increased the size of its share buyback program for the year and reported a better-than-expected profit for the second quarter.
Europe's largest insurer on Thursday reported a net profit of 2.51 billion euros ($2.74 billion) for the three months ended June 30 compared with EUR2.34 billion for the same period last year, beating an estimate of EUR2.32 billion taken from a company-compiled consensus.
Rheinmetall Confirms Sales Surge But Sticks To Guidance
Rheinmetall posted a 49% jump in sales, as the group continues to secure a steady stream of orders for ammunition and weaponry from governments seeking to support war-torn Ukraine, but stuck to its full-year guidance.
The German arms maker on Thursday confirmed sales of 2.23 billion euros ($2.44 billion) in the three months to the end of June, after posting preliminary figures on July 24. The result beats a consensus estimate of EUR2.08 billion, compiled by Visible Alpha.
Deutsche Telekom Net Profit Rises as Revenue Beats Market Expectations
Deutsche Telekom said second-quarter net profit rose on revenue that beat market expectations after strong growth in its core markets.
The German telecommunications said Thursday that net profit for the period jumped to 2.09 billion euros ($2.28 billion) from EUR1.54 billion for the same period a year earlier.
Munich Re Confirms Guidance After Net Profit Beats Market Views
Munich Re reported better-than-expected net profit for the second quarter and reiterated its outlook for the year.
The German reinsurer on Thursday posted net profit for the three months ended June 30 of 1.62 billion euros ($1.77 billion), up from EUR1.15 billion for the same period a year earlier and beating a consensus of estimates provided by the company of EUR1.44 billion.
Zurich Insurance Reports Market-Beating Earnings
Zurich Insurance Group reported market-beating first-half earnings, with strong performances from all units, and said it is making solid progress toward exceeding all 2023-2025 financial targets.
The Swiss insurer said Thursday that net profit for the half year ended June was $3.03 billion, compared with $2.49 billion for the comparable period a year earlier and a company-compiled consensus of $2.93 billion.
Uniper to Repay More State Aid to Germany
German energy company Uniper increased its provisions to repay the state aid it received during the energy crisis, and reported a solid financial performance in the first half of the year.
The Dusseldorf-based company said Thursday that it had increased its provisions to about 3.4 billion euros ($3.71 billion) from EUR2.2 billion previously, with roughly EUR540 million added from realized claims against Russia's state-owned Gazprom Export.
GLOBAL NEWS
Chinese Regulators Probe Banks for Breaking Bond Buying Rules
China's regional banks are under fresh scrutiny from regulators for snapping up treasury notes amid an extended rally in Chinese government bonds that's drawn alarm from the central bank.
The National Association of Financial Market Institutional Investors, a regulatory body backed by the People's Bank of China, said Wednesday that it's investigating four rural commercial banks in eastern Jiangsu province for potentially manipulating government bond prices.
These Stocks Held Up During the Selloff. What That Reveals About the Market.
August is the cruelest month. While growth stocks-and especially tech names-were in the spotlight during the month's brutal selloff, there was plenty of pain to go around. Yet there were some bright spots that show fundamentals still matter.
At the end of Monday's trading day, both the S&P 500 index and the Nasdaq Composite had recorded their largest three-day percentage declines in more than two years, falling 6.1% and 8%, respectively. The first two trading days of August were already the worst start to a month for the S&P 500 since 2011 and for the Nasdaq since 2008.
Retail investors haven't been this pessimistic in nine months, AAII survey finds
The latest American Association of Individual Investors survey finds retail investors are the most pessimistic they've been in nine months.
That comes after the S&P 500 SPX on Monday had its worst single day in two years, with the index finishing Wednesday down 8% from its mid-July record high.
Sinwar Power Grab Cements Hamas-Iran Ties
DUBAI-Hamas's elevation of the Oct. 7 attacks' architect, Yahya Sinwar, as its leader cements the militant group's strategic ties to Iran, signaling a united front between Tehran and its axis of militias in a conflict with Israel and the U.S.
Iran has supported Hamas with funds and training in recent years, but the relationship between Tehran's Shiite Muslim clerics and Gaza's Sunni Muslim militants was historically fraught with tension. Tehran split with Hamas over its support for the Arab Spring in Syria and didn't join the fighting after Oct. 7, as Sinwar and others had hoped. Inside Hamas, there was a schism over how much to trust Iran.
Ukraine's Army Surprises Russia With Move Across Border
POKROVSK, Ukraine-Ukraine launched an armored incursion into Russia's lightly defended Kursk region in a surprise move early Tuesday that caused panic among civilians and forced Moscow to rush in additional troops.
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08-08-24 0514ET
