European Midday Briefing : Stocks Up Ahead of Likely U.S Gains

MARKET WRAPS

Stocks:

European stocks were up on Wednesday after mixed Asia trading and ahead of an expected higher U.S. open.

Stocks to Watch

Investors in Adidas and Puma have reacted well to rival Nike's 2Q print, but recovery in the vital Chinese market may be more gradual for the German duo, Bryan Garnier said.

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Read Adidas, Puma Spurred by Nike Recovery in China, Inventory

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Bunzl has had a strong 2022, benefiting from the highest levels of product inflation in decades, plus continued post-lockdown rebounds, RBC Capital Markets said.

The company continues to execute acquisitions in a value-accretive and fairly consistent manner, offsetting underlying margin compression, RBC added.

Next year, however, the company faces tough comparables, increasing recessionary risks in Europe and higher borrowing costs, which could weigh on its earnings-per-share momentum, the bank said.

RBC retained its sector perform rating and 2,800 pence price target.

U.S. Markets:

Stock futures rose Wednesday, ahead of fresh data on consumer confidence and housing.

The yield on the 10-year Treasury note rose for a fourth day, edging up to 3.690%, compared to 3.683% the previous day.

Forex:

The dollar could fluctuate considerably in coming days as liquidity is likely to be thin and a raft of economic data will be released, Commerzbank said.

The market will probably keep an eye on data to assess what extent the economy is weakening and whether the Federal Reserve might be "overshooting" with its monetary policy tightening, Commerzbank added.

"Thin markets, U.S. data and the market's attempt to get a better idea of future monetary policy do not necessarily but could potentially constitute an explosive mix."

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The sterling may remain near current levels against the dollar over the Christmas period but looks set to fall in 2023 as the outlook looks challenging, ING said.

ING added that it "continues to see mostly downside risks for the pound in the new year, as a recessionary environment and sensitivity to market instability may cause a return to the 1.15-1.18 range in cable [GBP/USD]."

"For this festive season, GBP/USD may hold around 1.2100-1.2250."

Bonds:

Eurozone government bond yields rose, adding to Tuesday's selloff triggered by the Bank of Japan's decision to change the yield-curve control, allowing bond yields moving higher.

"The global financial markets continue to be affected by the surprise move by the Bank of Japan," Danske Bank said.

Energy:

Oil prices were little changed as investors balanced concerns about demand with the U.S. decision to begin refilling its strategic reserves.

U.S. plans to refill its oil reserve in February are backstopping oil prices, SPI Asset Management said.

Of concern though are the outcomes of China's reopening, which could see Covid-19 cases spike.

"Oil prices are wedged between the Biden Administration's bid to refill the SPR and demand implication" of rising Covid-19 cases in China, SPI added.

Metals:

Metals prices were mixed in London opening trade, with investors weighing how much material will be needed ahead of China's likely opening next year.

China's possible reopening next year is being weighed against recession headlines in western markets helping to give a mixed picture across risk assets, SPI Asset Management said.

Aluminum was 1.2% higher at $2,400 after Indonesia's President Joko Widodo on Wednesday confirmed an export ban for bauxite--the preliminary material for aluminum production--starting in June next year.

Indonesia produces nearly 5% of global bauxite, according to the USGS.

DOW JONES NEWSPLUS

EMEA HEADLINES

Ukraine Defends Bakhmut Against Russian Assaults as Zelensky Heads to U.S.

LVIV, Ukraine-The Ukrainian military said it had repelled a fresh wave of Russian assaults around the eastern city of Bakhmut following a visit there on Tuesday by President Volodymyr Zelensky, who is due to visit the U.S. on Wednesday.

The General Staff of the Armed Forces of Ukraine said in its regular morning report that Russian troops had assaulted Bakhmut and other towns and villages in the eastern Donetsk region, including with artillery and tanks, but without success. The Russian Defense Ministry said its military had seized some territory in Donetsk, without giving details, Russian state-run news agency TASS reported.

Uniper's Bailout by Germany Gets EU Green Light

Uniper SE's rescue package from Germany has been approved by the European Commission, the final clearance needed to implement the measures set out by the government to avoid the utility's collapse.

"The measure aims at restoring the balance sheet position and liquidity of Uniper in the exceptional situation caused by Russia's war of aggression against Ukraine, while maintaining the necessary safeguards to limit competition distortions," the European Union's executive arm said late on Tuesday. "It's necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a member state."

Ukraine President Volodymyr Zelensky Is Set to Visit Washington on Wednesday

Ukrainian President Volodymyr Zelensky is set to meet with President Biden at the White House and address a joint session of Congress on Wednesday night, in an effort to buttress political support in Washington as Kyiv is involved in an open-ended conflict to counter Russia's invasion.

A senior Biden administration official said the visit is intended to provide "an important injection of momentum" for continued U.S. and allied support in the months ahead.

GLOBAL NEWS

Citadel, Other Big Hedge-Fund Winners in 2022 to Return Some Profits to Clients

Citadel expects to return about $7 billion in profits to its clients on the back of what is expected to be its most profitable year ever, said people familiar with the firm, highlighting the banner year some hedge funds have had even as others nurse deep wounds.

Citadel's flagship fund gained about 32% for the year through November, benefiting from bets across the firm's strategies, the people said. The firm plans to return some profits from all four of its funds in early January but still expects to start 2023 with more than $50 billion in assets under management, one of the people said.

Sam Bankman-Fried Expected Back in Bahamas Court

NASSAU, Bahamas-Jailed FTX founder Sam Bankman-Fried is expected to return to court here Wednesday to seek his transfer into U.S. custody, paving the way for him to fly to New York to face criminal charges connected to the collapse of the crypto exchange.

Mr. Bankman-Fried has agreed not to contest his extradition, according to a person familiar with the matter, but must formally inform the court and get a magistrate judge's approval. Mr. Bankman-Fried has signed paperwork that triggered such a hearing, the person said. A court administrator said the hearing is scheduled for 11 a.m.

High Commodity Prices Feed a Boom in the U.S. Farm Belt

High prices for crops and livestock are fueling a boom in the U.S. Farm Belt, making farmers, ranchers and agricultural companies rare winners as the broader American economy softens.

U.S. net farm income is expected to surge to $160.5 billion this year, boosted by increased prices for farm goods ranging from wheat to milk, according to a key U.S. Department of Agriculture forecast in December. If realized, farm income would reach the highest level since 1973 in inflation-adjusted dollars, marking a sharp recovery from an agricultural recession that battered farmers and their suppliers during the past decade.

Justice Department Defends Ending Pandemic Border Controls

WASHINGTON-The Justice Department defended the planned termination of pandemic-era border controls inherited from the Trump administration, telling the Supreme Court Tuesday that public-health needs no longer justify excluding foreign nationals to prevent the spread of Covid-19.

The Justice Department's brief came a day after Chief Justice John Roberts issued an administrative order keeping the Trump-era policy, known as Title 42 for a provision of the federal Public Health Service Act, in place temporarily while Arizona and other Republican-led states challenge its termination.

White House Looks at Benefits to Lure Americans Back Into Workforce

WASHINGTON-Top White House economic officials are considering a renewed push for a suite of policies aimed at luring more Americans back to work, including enhanced child- care and eldercare benefits, as they hammer out priorities for the coming year.

The question of how to find enough workers has emerged as a significant issue as the country emerges from the pandemic, with a smaller share of adults working or looking for work than in early 2020. White House economic officials expect to brief President Biden on their thoughts over the holiday break as the administration shapes its agenda for 2023 and plans for Mr. Biden's State of the Union address.

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

12-21-22 0616ET