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European Midday Briefing: Stocks Stumble as Energy Fears Mount

08/11/2022 | 06:03am EDT

MARKET WRAPS

Stocks:

European stocks wavered between minor losses and gains on Thursday as investors contended with a mixed bag of earnings and a fresh surge in gas prices.

Holding back shares were worries that Germany's Rhine River could see water fall below critical levels after weeks of hot, dry weather, making it impossible for most transport barges to sail.

Separately, Deustche Bank warned that a standstill at a key bottleneck on the Rhine, the Kaub, could completely halt shipping on the river as happened in 2018, when transport to and from the southern industrial sites had to be interrupted.

U.S. Markets:

Stock futures advanced as investors continued cheering a softer-than-expected inflation reading, hoping it will slow the Federal Reserve's place of interest-rate increases.

Investors are awaiting fresh data on prices paid by U.S. suppliers in July for further signs that inflation may be stabilizing.

Stocks to Watch:

Disney shares jumped 7.3% in premarket trading after it reported better-than-expected fiscal third-quarter earnings and subscriber growth.

Other Stocks Making Moves:

Bumble declined 10% after it forecast for the fiscal third-quarter revenue missed Wall Street expectations.

Sonos fell 19.5% after it and other audio products posted weak revenue in the fiscal third quarter and reduced its outlook, citing the impact of a tougher macroeconomic environment.

Coupang rose 6% after the South Korean e-commerce company boosted its earnings forecast for 2022.

Forex:

The euro's gains against the dollar are likely to be limited as the Fed stays committed to raising interest rates and Europe's energy-supply issues remain a headwind for the single currency, ING said.

The dollar's slide on Wednesday won't last as Fed officials reaffirmed their plans to lift rates further, ING said.

Meanwhile, drought conditions and low water levels in Europe's Rhine River will challenge coal shipments among other cargoes, keeping European natural gas prices high, ING added.

"This factor remains an outright euro negative." EUR/USD 1.0350-1.0400 could prove the top of the August trading range, ING said.

The dollar continued to lose ground on Thursday and Ebury said evidence that U.S. price pressures might have peaked could convince the Fed to deliver smaller interest-rate rises.

"At the time of writing, markets are now pricing in not much more than a one-in-three chance of a 75 basis point rate increase at the Fed's September meeting, down from almost 70% prior the inflation number."

Energy:

Oil prices turned higher after the IEA said that demand would be stronger than expected due to increased power generation.

The agency said heatwaves were driving more demand for electricity to power fans and air conditioning units. With natural gas prices so high and supplies scarce, power plants--particularly in Europe--were switching to oil as an alternative fuel source.

Read: European Heatwaves Boost Demand for Oil, IEA Says

European natural gas prices jumped on fears that low water levels on the Rhine river would pose a fresh bottleneck for Europe's energy supplies. Benchmark European natural gas prices rise 7.7% in early trading.

Dry, hot weather is expected to see water levels on the major European waterway drop to as low as 40cm at one point, making it impossible for most barges to sail.

"The inability to transport commodities through the Rhine river threatens to exacerbate Europe's energy crisis," said CBA in a note. "Not only do LNG cargoes become more sparse, but even coal transport is adversely affected."

Metals:

Base metals were higher while gold dipped, with investors more confident about the global economy following the latest U.S. inflation data.

"Investors are gaining confidence that the Fed finally has inflation under control," Peak Trading Research said, adding that risk assets like commodities were now more appealing.

DOW JONES NEWSPLUS


EMEA HEADLINES

European Heat Waves Boost Demand for Oil, IEA Says

Summer heat waves in Europe and scarce supplies of pricey natural gas are boosting demand for oil as power stations look for alternative fuels to meet the surging demand for electricity, the International Energy Agency said.

Unprecedented temperatures across the continent have put an unexpected strain on the region's power grids, lifting demand for electricity to power fans and air-conditioning units in what is typically a quiet period for energy demand.


Siemens Swung to Loss in 3Q on Impairment Charge; Cut EPS Target for FY 2022

Siemens AG cut the outlook for earnings per share for the full fiscal year after it swung to a loss in its third quarter due to an impairment on its investment in Siemens Energy AG.

The German industrial conglomerate said Thursday that its net loss was 1.66 billion euros ($1.71 billion) for the period ended June 30, compared with a profit of EUR1.35 billion a year earlier. Analysts had forecast a loss of EUR532 million, according to consensus estimates provided by Siemens.


Daimler Truck 2Q Profit, Revenue Rose

Daimler Truck Holding AG on Thursday posted an increase in sales and net profit in the second quarter and confirmed its previously given full-year revenue guidance.

The German commercial-vehicles maker said quarterly net profit was 922 million euros ($949.6 million), compared with EUR601 million a year earlier.


Hapag-Lloyd 2Q Profit Jumped on Higher Shipping Rates

Hapag-Lloyd AG on Thursday reported a jump in second-quarter profit as it continued to benefit from higher shipping rates.

The German shipping company posted a net profit of 4.48 billion euros ($4.61 billion), up from EUR1.52 billion a year earlier.


Deutsche Telekom Raises 2022 View After Posting Higher 2Q Revenue

Deutsche Telekom AG on Thursday raised its guidance for the second time this year, citing good performance at both its T-Mobile US Inc. business and outside the U.S.

The German telecommunications company reported a net profit of 1.46 billion euros ($1.50 billion) compared with EUR1.88 billion during the same period a year earlier. The fall was mainly due to expenses for the integration of its newly acquired Sprint business in the U.S., it said.


Thyssenkrupp Beat Analyst Views in Third Quarter, But Was Stung by Higher Interest Rates

Thyssenkrupp AG on Thursday cut its net profit guidance for fiscal 2022, blaming high interest rates, but backed its other targets for the year after its third-quarter results beat analyst views.

The German industrial company reported adjusted earnings before interest and taxes of 721 million euros ($742.6 million) for the three months to June 30, up from EUR266 million a year earlier, as sales rose 26% to EUR10.95 billion.


Zurich Insurance 1H Operating Profit Jumps Above Views, to Launch CHF1.8 Bln Share Buyback

Zurich Insurance Group AG said Thursday that first-half operating profit jumped, beating expectations as it dealt with turbulent markets, and said it would launch a large share buyback.

The Swiss insurer's business operating profit rose 25% to $3.39 billion in the six months to the end of June, its highest since 2008, driven by an underlying improvement across all businesses, Zurich said.


RWE 1H Adjusted Net Income Rose; Backs 2022 Guidance Lift

RWE AG on Thursday said that adjusted net income rose in the first half and confirmed the outlook lift for the full year on the back of strong earnings.

The German energy company posted adjusted net income of 1.57 billion euros ($1.61 billion), compared with EUR870 million a year earlier.


Aegon Raises Guidance, Reports 2Q Loss

Aegon NV on Thursday raised guidance for 2021-2023 free cash flow and 2022 operating capital, and reported a net loss for the second quarter.

The Dutch insurance, pensions and asset management company lifted its cumulative free-cash-flow guidance for 2021-2023 to at least 2.2 billion euros ($2.27 billion) from the previous forecast of EUR1.4 billion to EUR1.6 billion. In addition, Aegon raised 2022 operating capital generation guidance to EUR1.4 billion from EUR1.2 billion.


Ukraine Wins Investor Approval to Pause Payments on Foreign Debts

Investors approved a two-year payment delay on roughly $20 billion of Ukraine's foreign-currency debt, heeding calls from Washington and other allied governments to grant the embattled nation a financial reprieve as it burns through cash.

Ukraine asked bondholders last month to push back payments of interest and principal on a clutch of dollar- and euro-denominated government bonds, with a combined face value of nearly $20 billion, by two years. The government's request came as little surprise to creditors, who had expected that Kyiv would need to restructure its debts as the war dragged on.


Ukraine Mocks Russia After Explosions at Crimean Air Base

Ukrainian officials seized on explosions that rocked a Russian military base as a sign of Moscow's vulnerability, as Kyiv steps up a counteroffensive to reverse Russia's territorial gains.

Kyiv didn't take responsibility for Tuesday's blasts at the Novofedorivka air force base on the Crimean Peninsula along the Black Sea coast. But officials and ordinary citizens celebrated, mocking Russian claims that it was a minor incident caused by an ammunition explosion and sharing photos on social media of their visits to the peninsula before Russia annexed it in 2014.


Polio Vaccine Booster to Be Offered to Children in London as Virus Circulates

British health authorities launched a polio booster vaccination campaign for children in London on Wednesday after levels of poliovirus detected in local wastewater showed that the virus is circulating in the U.K. capital.

The move is a sign that the authorities are concerned about a potential resurgence of polio in the U.K., which has long been free of the serious illness that affects mostly children.


GLOBAL NEWS

Fed Likely to Want Further Evidence of Inflation Slowdown

(MORE TO FOLLOW) Dow Jones Newswires

08-11-22 0602ET

Stocks mentioned in the article
ChangeLast1st jan.
AEGON N.V. -0.53% 4.288 Real-time Quote.-1.87%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) -0.06% 0.65085 Delayed Quote.-10.43%
BRITISH POUND / US DOLLAR (GBP/USD) -0.86% 1.13519 Delayed Quote.-16.21%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) -0.69% 0.7351 Delayed Quote.-7.24%
COUPANG, INC. 1.48% 19.85 Delayed Quote.-33.42%
DAIMLER TRUCK HOLDING AG -1.43% 24.43 Delayed Quote.-23.24%
DEUTSCHE TELEKOM AG -2.47% 17.952 Delayed Quote.12.92%
EURO / US DOLLAR (EUR/USD) -0.75% 0.99077 Delayed Quote.-12.19%
INDIAN RUPEE / US DOLLAR (INR/USD) -0.22% 0.01225 Delayed Quote.-8.62%
LONDON BRENT OIL 2.04% 93.61 Delayed Quote.13.79%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) 0.63% 0.57692 Delayed Quote.-16.33%
PAX DOLLAR (USDP/USD) 0.40% 0.999 End-of-day quote.-0.09%
RWE AG 1.08% 40.11 Delayed Quote.11.09%
S&P GSCI NATURAL GAS INDEX 0.36% 325.6391 Real-time Quote.82.68%
SIEMENS AG -1.96% 104.24 Delayed Quote.-30.36%
SIEMENS ENERGY AG -5.62% 11.51 Delayed Quote.-45.78%
SONOS, INC. 1.39% 14.58 Delayed Quote.-51.75%
T-MOBILE US -0.92% 141.23 Delayed Quote.22.90%
THYSSENKRUPP AG -4.65% 4.758 Delayed Quote.-48.47%
US DOLLAR / RUSSIAN ROUBLE (USD/RUB) 1.67% 60 Delayed Quote.-22.58%
WALT DISNEY COMPANY (THE) -0.63% 100.8 Delayed Quote.-37.29%
WTI 1.76% 88.008 Delayed Quote.14.86%
ZURICH INSURANCE GROUP LTD -0.41% 408.1 Delayed Quote.2.35%