European Midday Briefing : Stocks Mixed as Semiconductor-Equipment Makers Fall

MARKET WRAPS

Stocks:

European stocks traded mixed on Thursday, with shares in semiconductor-equipment makers logging significant losses.

Shares in Dutch semiconductor-equipment manufacturers ASML, ASM International and BE Semiconductor fell in early trading after South Korean chipmaker SK Hynix said it expected a limited increase in its total investment this year.

Stocks to Watch

Societe Generale 's French retail recovery is key, Jefferies said. Industry data suggests banks should start their engines of loan production after almost two years of subdued loan issuance and higher liability costs linked with regulated savings accounts, it said.

"The new CFO's first earnings call will set the tone for 2025 in our view," Jefferies added, pointing to returns and the investment case.

U.S. Markets:

Stock futures ebbed ahead of President Trump's expected video address at the World Economic Forum, and another blast of earnings.

GE Aerospace, American Airlines, Elevance Health, Freeport-McMoRan, Texas Instruments and CSX are due to report.

Stocks to Watch

Electronic Arts fell 14% after it slashed its fiscal-year bookings guidance because of underperformance in its soccer titles.

Nvidia, Arm, Oracle and Microsoft fell premarket, handing back some of the gains made a day earlier on news of their involvement in the AI-infrastructure partnership Stargate. Elon Musk later publicly questioned if the joint venture would ever get off the ground.

Forex:

The euro's upside potential looks limited given unfavorable U.S.-eurozone interest-rate differentials, MUFG Bank said.

The Federal Reserve has adopted a more cautious approach to delivering further rate cuts compared to the European Central Bank, it said.

The widening policy divergence between the ECB and Fed should put the euro under selling pressure versus the dollar at the start of this year, MUFG added.

Sterling faces further weakness as U.K. Treasury chief Rachel Reeves is challenged about her budget at the World Economic Forum in Davos, Swissquote Bank said.

Reeves told The Wall Street Journal at Davos on Thursday that she "hears" criticism of her budget but hasn't been presented with "any serious alternative" to steady the public finances.

The budget, delivered in October, included tax rises to plug a hole in the public finances.

Investors are "losing confidence in Reeves' growth-boosting plans," Swissquote Bank said.

Sterling's outlook remains negative, also given expectations of at least two Bank of England interest-rate cuts this year, it added.

The dollar rose ahead of remarks from Trump at the World Economic Forum in Davos, Switzerland later. Trump is due to speak remotely at 1600 GMT.

"One new area of interest may be the international tax code, where he could potentially tariff countries trying to enact the OECD's Global Minimum Tax--clearly something on the mind of his tech industry sponsors, " ING said.

This dialogue could prove positive for the dollar, ING added.

The Norwegian krone fell after the Norges Bank confirmed that it expects to start cutting interest rates in March .

"We think the path of inflation will allow the Bank to move a bit more quickly, cutting by 25bp once per quarter until the policy rate reaches 3% in the middle of 2026," Capital Economics said.

Bonds:

While headwinds from the Treasury market weigh on German Bunds, spread tightening is gathering pace despite the issuance wave, Commerzbank Research said.

"Although 10-year Bunds didn't manage to break the 2.5% mark lastingly yet, spreads tightened and investors are taking down the primary supply in stride."

The massive order books of this year's government bond syndication in the eurozone fit the picture, it said.

PCE data on Jan. 31 could be supportive of Treasurys, ING said.

"For Treasury bulls, if this number comes in at 0.2% (or better) that would be a clean sweep of core inflation readings turning the corner again," ING said. This time "in a positive-for-bonds direction."

Energy:

Oil prices continued to be volatile in early trade amid uncertainties over the impact of Trump's energy policies and proposed tariffs on the market.

"Most of his policies could ultimately tighten the oil market," ANZ Research said, citing Trump's plans to refill strategic reserves, potentially place more sanctions on Russia and stop buying oil from Venezuela.

Meanwhile, U.S. trade tariffs could end up hurting global growth, dampening demand. "More details on his policies are needed to fully understand their impacts on the oil market," ANZ added.

European natural-gas prices rose more than 3%, with the spike largely attributed to an outage at the U.S. Freeport LNG facility and news that Germany might subsidize storage refills this summer to ensure the country reaches its target.

"The rally in global gas prices fizzled out amid the broader retreat across the commodity sector," ANZ said.

Metals:

Gold futures fell, though they remained slightly up on week. Gold has risen significantly since the start of the year, as Trump's unpredictability added fresh momentum to the precious metal, Sucden Financial said.

The administration has announced plans to impose a 10% tariff on imports starting next month--a lower rate than many had anticipated, though details remain uncertain, it said.

Now that bullion has broken out of its recent range, it looks set to challenge record highs again, Sucden added.

EMEA HEADLINES

Puma Shares Slump After 4Q Miss, Cost-Cutting Plan

Shares in Puma fell after the German sporting-goods company posted net income below market expectations and said it was launching a new cost-saving program driven by higher expenses and sluggish sales growth.

Shares traded 16% lower at 35.30 euros in early European trade on Thursday. They are down 18% in the past 12 months.

Sweden's Investor AB Registers Negative Total Shareholder Return of 6%

STOCKHOLM-Investor AB posted a negative total shareholder return for the fourth quarter of 2024 amid an uncertain global macroeconomic picture, with mixed development in its main regions.

The company said Thursday that the total shareholder return was minus 6% in the quarter, but for 2024 as a whole the total shareholder return was 27%.

French Factory Mood Darkens as 2025 Clouds Gather

Sentiment among French manufacturers deteriorated at the start of a new year clouded by global economic uncertainty and political strife at home.

A monthly index of manufacturer confidence fell to 95 in January from 97 in December, the country's statistics agency Insee said Thursday, taking it further below the long-term average for sentiment marked by a reading of 100.

AB Foods Cuts Primark Growth Target on Weak Fall Sales

Associated British Foods lowered its sales-growth forecast for fast-fashion chain Primark due to a weak performance in the U.K. and Ireland in the fall amid a challenging retail environment.

The British conglomerate said Thursday that it now expects sales growth at Primark-the company's clothing retailer that accounts for the lion's share of its earnings-for the year to be driven by new store openings.

GLOBAL NEWS

China Ramps Up Support for Its Stock Markets

Chinese authorities are ramping up support for the country's embattled equities markets by drawing in more medium- to long-term investment from major funds and insurers.

The latest round of measures comes as Chinese stocks start the year on a soft note, with investors reluctant to add exposure amid lingering economic woes at home and potential U.S. tariffs from President Trump's administration. Sharply higher tariffs on China's export sector would threaten the economy's sole bright spot over the past year.

Trump Will Join Davos Meeting Virtually. World Leaders Will Be Watching.

President Trump is slated to participate virtually in the World Economic Forum's annual meeting on Thursday morning at Davos-Klosters, Switzerland, and will deliver remarks via live video links, according to the current schedule of events.

He is scheduled to join a dialogue with WEF founder and board Chairman Klaus Schwab and WEF President and CEO Børge Brende at 17:00 Central European Time/11 a.m. Eastern. The schedule didn't provide details on the topic of conversation.

China Pushes Neighboring Countries to Rein In Scams After Rare Public Outcry

Authorities in Beijing are ramping up pressure on neighbors to rein in cyberscams after the high-profile kidnapping of a young Chinese actor who says he was trafficked into a criminal enclave in Myanmar.

Parts of war-torn Myanmar and other countries in Southeast Asia have become havens for sprawling scam compounds, where hundreds of thousands of people are forced to swindle billions of dollars out of victims in the U.S., China and elsewhere. The scammers, many of whom have themselves been duped and effectively enslaved by criminal gangs, often ensnare victims in fake relationships and persuade them to pour money into bogus investments.

Trump Appoints New Head of Secret Service

WASHINGTON-President Trump on Wednesday named Sean Curran, the head of his security detail, as the next director of the Secret Service, elevating him to lead the agency as it seeks to move past two assassination attempts on Trump last year.

In a social-media post, Trump said Curran "protected my family over the past few years, and that is why I trust him to lead the Brave Men and Women of the United States Secret Service."

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

(END) Dow Jones Newswires

01-23-25 0533ET