MARKET WRAPS

Stocks:

European shares were mostly higher on Thursday and with the U.S. election decided, investors will turn their attention to the coming Federal Reserve policy decision and press conference.

While the Fed is widely expected to cut interest rates by a quarter-percentage-point, investors are on alert for signals about the prospects of another cut in December. A rate decision is also due from the Bank of England , which is also expected to cut by 25 basis points.

Stocks to Watch

European defense stocks should brace for price volatility in the coming months until Europe gets a clearer idea of Donald Trump's foreign policy, Citi said, with possible isolationism and a rumored Russia-Ukraine ceasefire in the mix.

U.S. Markets:

Stock futures ticked up a day after Trump's election victory powered the three major U.S. indexes to new all-time highs.

As well as the Fed decision, third-quarter earnings keep rolling in, with results due from Hershey's. Around 100 S&P 500 companies are expected to have reported by the end of the week.

Forex:

The dollar edged down ahead of an expected 25bp rate cut by the Fed, with the election unlikely to change anything for the central bank, Commerzbank said.

The election is unlikely to change anything for the Fed in the short term, Commerzbank said, and will continue to make policy decisions independently of the election. Easing inflation and a cooling labor market support the case for further rate cuts, Commerzbank added.

Sterling gained ground, with the BOE expected to cut interest rates later but take a cautious approach to future cuts, Commerzbank said. The view that faster growth and higher inflation might require less rate cuts "seems to have taken hold," Commerzbank added.

The Norwegian krone rose after Norway's central bank left interest rates unchanged and said it continued to expect rates to be held steady until year end.

Bitcoin eased back from its record high but Zaye Capital Markets said Trump's potentially inflationary policies, the Fed's rate cut cycle and increasing institutional interest in the cryptocurrency could lift it further.

Bonds:

Bund yields rose early in the session, as traders shrugged off the collapse of Germany's coalition government due to disagreements over economic policy.

"Increased political uncertainty will not be positive for the already fragile German economy and could hurt growth through lower investments," Danske Bank said.

The selloff in Treasurys leaves them attractive at these yield levels, Pepperstone said, with the two-year notes in particular, trading at 4.25%, looking "rather oversold."

Pepperstone said a degree of Wednesday's move "can be put down to concerns over greater issuance amid a potentially ballooning budget deficit."

However, the selling pressure also reflects a substantial re-rating to the upside of both medium-run growth and inflation expectations.

Energy:

Oil prices dipped but have recovered some of the previous session's losses.

"The impact of a Trump presidency is still uncertain with several opposing forces potentially at play," including potentially stricter sanctions against Iran but also prospects of more leases for oil-and-gas drilling, ING said.

Meanwhile in China, crude imports fell around 9% on year in October on unattractive refining margins and weak demand, according to market watchers.

Metals:

Gold futures extended their recent post-election fall.

A stronger dollar might act as a headwind for gold, but this could be offset by safe-haven demand given the geopolitical uncertainty that could accompany another Trump presidency, ING said.

Rising trade friction from Trump's proposed policies, including tariffs and stricter immigration controls, could also increase safe-haven appeal, ING added. That said, the policies are inflationary in nature and could limit interest rate cuts from the Fed.

Copper/Data Centers

Morgan Stanley said data centers currently account for 1.5% of copper demand but this will rise to 2% in 2027. That's because copper is needed for electrical wiring and power grids to support data centers. It projects a 74% increase in data-center power usage over 2024-2027.

"In addition, we find incremental demand from data centers coming as we are forecasting a tight market, with our supply-demand modeling resulting in small deficits till 2030."


EMEA HEADLINES

Telefonica Net Profit Slumps on Brazilian Real Depreciation, Impairment

Telefonica reported a sharp decline in net profit for the third quarter due to depreciation of the Brazilian real and an impairment.

The Spanish telecommunication company said net profit fell to 10 million euros ($10.7 million) from 502 million euros for the same period a year earlier. This missed company-compiled consensus estimates of 329 million euros.


Rheinmetall Posts Jump in Sales, Reiterates Full-Year Guidance

Rheinmetall's sales soared in the third quarter as the German group consolidated its place as one of Europe's main ammunition and weapon suppliers, but stuck to its full-year guidance.

The arms maker said Thursday that for the three months to Sept. 30, sales rose by 39.5% on year to 2.45 billion euros ($2.63 billion), beating a consensus estimate of 2.42 billion euros provided by the company.


Rolls-Royce Backs Guidance; Trading in Line With Expectations

Rolls-Royce Holdings backed its full-year guidance, with current trading in line with expectations, as it continues to work through a multiyear transformation plan.

"Continued good performance year to date gives us further confidence in the delivery of our 2024 guidance despite a supply chain environment which remains challenging," Chief Executive Tufan Erginbilgic said.


Air France-KLM Shares Fall After Earnings Miss Expectations

Air France-KLM shares fell in early morning trading in Paris after the Franco-Dutch carrier reported third-quarter earnings which missed analysts' expectations.

Shares fell 9.9% after the company reported a 12% on-year drop in operating profit to 1.18 billion euros ($1.27 billion).


GLOBAL NEWS

Sweden's Central Bank Opts for Large Cut Amid Uncertain Economic Outlook

Sweden's central bank lowered its key interest rate on Thursday, becoming the first central bank to do so since the election of Donald Trump as U.S. president created fresh uncertainties about the global economic outlook.

The Riksbank cut it key interest rate by 50 basis points to 2.75% and said borrowing costs would likely be lowered again soon as an economic recovery seems elusive.


Norges Bank Holds Key Rate Steady, Says Cut Remains Unlikely This Year

Norway's central bank held its key policy rate at 4.5% as a weak krone continues to threaten efforts to bring inflation down.

The decision was in line with a Wall Street Journal poll.


German Industry Retreats Further as Government Collapse Deepens Crisis

German industrial production fell in September, signaling that manufacturing remains in poor health and adding to the country's woes as leading companies mull factory closures and its coalition government collapsed.

Output dropped 2.5% on month in September, on a seasonally and calendar-adjusted basis, nearly offsetting the 2.6% rise in August, German statistics agency Destatis said Thursday.


China's Export Growth Accelerates as Tariff Threat Looms

China's exports rose at a faster-than-expected pace last month, extending their growth streak and providing crucial support for an economy struggling to regain momentum.

Outbound shipments rose 12.7% from a year earlier in October, up sharply from the 2.4% increase in September, the General Administration of Customs said Thursday.


Trump's Win Signals More Confrontation With Beijing

BEIJING-Donald Trump's return to the White House injects new volatility into ties between the U.S. and China, threatening to transform a tense relationship between the world's two main powers into something less predictable and more confrontational.

Trump's election comes at a starkly different moment in U.S.-China ties than when he first took office in 2017. Prior to Trump's first term, Washington largely played down differences with Beijing in a bid to bring China into the U.S.-led global order.


Trump Promised to End the War in Ukraine. Now He Must Decide How.

WASHINGTON-Donald Trump's promise to end the war in Ukraine by Inauguration Day now puts him in a position of having to choose between competing proposals from advisers united by a common thread-a sharp break from President Biden's "as long as it takes" approach to arming Kyiv.

Throughout his campaign for the White House, Trump bashed Biden's handling of Ukraine, warning that it made World War III more likely and that Kyiv fleeced the U.S. by obtaining weapons worth billions of dollars free of charge. He has said he could resolve the conflict quickly, bringing both sides to the negotiating table, but hasn't revealed how he would do so.


Germany's Fractious Government Collapses

BERLIN-Germany's fractious coalition government collapsed on Wednesday, tipping the economically embattled nation into a political crisis and adding uncertainty for Europe as the region grapples with Donald Trump's election win in the U.S.

Chancellor Olaf Scholz dismissed Finance Minister Christian Lindner, chairman of the pro-business Free Democratic Party-the smallest member of his three-way coalition of free-market liberals, social democrats and Greens-because of disagreements over economic policy, a spokesman for Scholz said.


Allies Fret Over Trump Presidency as Authoritarian Axis Challenges U.S.-Led Order

Donald Trump is returning to the White House as the world is embroiled in two widening regional wars, America's rivals are coalescing into a new global authoritarian axis and some of the U.S.'s closest allies fret over his re-election's consequences.

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11-07-24 0517ET