European Midday Briefing : Upbeat Mood Pushes Stocks Modestly Higher

MARKET WRAPS

Stocks:

European stocks traded in positive territory on Friday as the mood remained relatively upbeat following this week's stellar earnings from Nvidia which propelled many European indexes to record highs.

London's FTSE 100 rose 0.1% in early trade, boosted by strong gains for Standard Chartered after it posted stronger-than-expected profit and outlined plans to return cash to shareholders.

U.S. Markets:

Stock futures were lower while Treasury yields edged up further above 4.3%.

Earnings from Warner Bros. Discovery are due. Its shares were rising 2.4% premarket.

Stocks to Watch

Intuitive Machines was rising 64% after the company's Odysseus spacecraft became the first privately funded lander to successfully reach the moon.

Nvidia was up 2.6% in premarket trading after shares surged 16% on Thursday following the blowout quarterly earnings.

Forex:

German 10-year Bund yields and the euro showed no significant reaction to German Ifo business sentiment data which were in line with analyst expectations.

The dollar typically falls during periods of risk appetite, such as Thursday's bumper gains in equities following Nvidia's strong results, but these falls are currently limited due to high U.S. bond yields, MUFG said.

The dollar's correlation with bond yields is twice as strong as its correlation with changes in risk appetite, MUFG added.

The 2-year Treasury yield is 50 basis points higher this month, slightly more than Germany's equivalent bond, which "makes it more questionable whether the dollar can weaken on the back of increased risk appetite."

Bonds:

The 10-year BTP-Bund yield spread, which has broken below the 150 basis point barrier, remained on track to Citi Research's 130bps target for the second half of the year, but the pace of narrowing is likely to slow.

"The pace of spread tightening might slow given the increase in periphery NCR [net cash requirement] in March and the recent reduction in the magnitude of Italy/Spain data surprises over EA [euro area] aggregate."

Citi Research would consider any widening of the 10-year BTP-Bund spread to above 150bps as a buying opportunity, "with our 130bp target for H2 looking firmly on track."

Gilt yields climbed as prospects of the Bank of England cutting interest rates in the first half of 2024 dwindled after Thursday's U.K. purchasing managers' data beat expectations and showed improved economic activity.

"Both the U.S. and U.K. duration have still more room to sell off," Mizuho said, adding that it expects 10-year gilts to rise towards the 4.25% area in the near term.

Energy:

Oil prices slipped as the Fed pushed back on expectations for rate cuts any time soon, and concerns around sluggish demand weighed further.

Metals:

Base metals fell, while gold was broadly flat, as economic data and low China demand weighed.

The prices of precious metals-which had been on an upward trend for much of the week-took a hit following the release of U.S. economic data, causing gold and silver to lose their momentum, Sucden Financial said.

Meanwhile, industrial metals have stayed firmly in the doldrums as mainland Chinese demand continued to falter amid an extended downturn in the property sector and limited pick up in manufacturing, BMI said.

Copper

Despite pressure from tighter monetary policies and weaker economic growth, demand for copper has remained strong amid increased focus on electrification and decarbonization, ANZ said.

Growth in demand from China, the U.S. and India, three of the top five consumers, is expected to reach 4.3% in 2024, ANZ added.

EMEA HEADLINES

U.K. Consumer Confidence Ticks Down on Weaker View of Economy

U.K. consumers are a little less upbeat in February, with concerns over the state of the economy growing ahead of a likely election this year, a monthly survey published Friday said.

Research group GfK's Consumer Confidence Barometer dipped two points on month to minus 21 in February, flipping expectations that the index would improve a little, to minus 18, according to a consensus of economists polled by The Wall Street Journal.

Allianz Boosts Shareholder Returns After Profit Nearly Doubles

Allianz said fourth-quarter profit nearly doubled after a strong performance in its life-health segment and launched a new share buyback while hiking its dividend payout.

The German insurer said Friday that net profit in the three months to the end of December was 2.15 billion euros ($2.33 billion) compared with EUR1.1 billion in the same period last year.

Deutsche Telekom Expects Adjusted Earnings Growth to Pick up

Deutsche Telekom forecast growth in adjusted earnings would pick up this year, supported by its U.S. and European operations, but reported a fall in net profit for the fourth quarter.

The German telecommunications giant said Friday that adjusted earnings before interest, taxes, depreciation and amortization after leases-a closely watched metric in the industry-to be around 42.9 billion euros ($46.44 billion) in 2024, up 6% on year.

BASF to Cut Jobs, Launch Further Cost-Cutting Measures at German Production Site

BASF said that it will cut jobs as it plans to launch another cost-cutting program targeting its Ludwigshafen site, and confirmed its year-end results which, as previously disclosed, were hampered by impairments and lower margins.

The German chemical company said that in addition to the cost-cutting it launched in 2022, it intends to launch an additional program to cut costs in Ludwigshafen by a further 1 billion euros ($1.08 billion) annually by the end of 2026.

GLOBAL NEWS

As Trading Frenzies Grip Penny Stocks, Criticism of Nasdaq Grows

Nasdaq touts itself as the stock exchange for many of the world's most iconic and successful companies. It is also the home of Bit Brother.

The China-based company focused on selling tea products until it pivoted to cryptocurrencies in 2021. Its shares have fallen more than 99% since the beginning of 2020, after accounting for the three reverse stock splits it has done.

Fed Gov. Waller Urges Caution on Lowering Interest Rates

Federal Reserve Gov. Christopher Waller urged a slow and cautious approach to easing monetary policy this year, given a still-uncertain outlook for inflation and recent strong economic data. His comments on Thursday evening were the latest in a string of Fed officials talking down the likelihood of near-term interest-rate cuts.

"The data that we have received...has reinforced my view that we need to verify that the progress on inflation we saw in the last half of 2023 will continue and this means there is no rush to begin cutting interest rates to normalize monetary policy," Waller said in prepared remarks for a Thursday evening event in Minneapolis, Minn. organized by the Notre Dame Club of Minnesota and University of St. Thomas. His speech was titled "What's the Rush?"

Nikki Haley Tries to Hold Back Trump Onslaught in South Carolina

MYRTLE BEACH, S.C.-Nikki Haley unleashed a full-throated attack against Donald Trump on Thursday evening, portraying him as a major drag on the Republican Party's future as she sought to avoid a landslide drubbing in her home state's presidential primary on Saturday.

"Donald Trump can't win a general election," the former South Carolina governor and United Nations ambassador told several hundred supporters here, after saying the GOP needs to select someone with "moral clarity" who knows "the difference between right and wrong."

U.S. Warns Russia Not to Deploy Nuclear-Armed Space Weapon

WASHINGTON-The U.S. has privately warned Russia not to deploy a new nuclear-armed antisatellite weapon, which it said would violate the Outer Space Treaty and jeopardize U.S. national security interests, U.S. officials said.

The rare outreach by top U.S. national security and intelligence officials is part of a diplomatic campaign that the Biden administration is mounting to head off the threat that also involves approaches to China, India, G-7 nations and other close allies that have interests in space and channels to Moscow.

How Trump Turned Conservatives Against Helping Ukraine

FORT WASHINGTON, Md.-Billions in potential American aid to Ukraine is stuck in monthslong limbo on Capitol Hill, and to the Trump-loving partisans attending this year's Conservative Political Action Conference, that's exactly as it should be.

"I don't want any more funding for Ukraine. That's very important to me, " said Sue Errera, a 70-year-old retired jeweler from Seneca, Pa. "We need to take care of ourselves first. I don't agree with Putin, he's definitely a dictator, but I don't think he's causing all the problems."

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

(END) Dow Jones Newswires

02-23-24 0544ET