Most European benchmarks pushed higher Friday on improved risk
sentiment after Wall Street's rally and following some encouraging
London's FTSE 100 lagged, however, as utility and oil companies
were under pressure after U.K. Treasury Chief Rishi Sunak Thursday
outlined a windfall tax on oil-and-gas producers to ease a
UniCredit said a majority of European companies have reported
better-than-expected quarterly financial results but this comes
with warnings that future earnings may not meet analysts'
"The earnings season is almost over, with almost 90% of Stoxx
Europe 600 corporates having reported their quarterly results,"
UniCredit analysts said, adding that companies surprised mostly on
Around 72% of them reported better-than-expected revenue and 65%
reported better-than-expected earnings, though most companies
issued outlook warnings, with the war in Ukraine likely to weigh on
future earnings as the conflict drags on.
The European Central Bank is more likely to initiate the
interest rate rise cycle with 25 basis points in July as favored by
Christine Lagarde, rather than the 50 bps that has been advocated
for by the more hawkish camp of the Governing Council, said
Although recent comments by ECB members paint a picture of a
divided Governing Council, SEB continues to forecast 75 bps of
deposit rate rises in 2022, followed by another 75 bps in 2023.
If the ECB Bank starts its interest rate rise cycle with a 50
basis-point increase in July, the market would likely price in
follow-up 50bp rises in the rest of the year, said Barclays.
However, a 50bp rise in July is not a certainty as inflation
expectations are starting to cool off from their peaks, while
recessionary noise is increasing in the background.
Markets are pricing in an ECB deposit rate rise of slightly more
than 25bps for July and a total of more than 100bps for 2022,
according to Refinitiv data.
The U.K. government's fiscal package, valued at around GBP15
billion, significantly reduces the chances of the economy falling
into recession later this year because it is timely and
well-targeted, said Pantheon Macroeconomics' chief U.K. economist
The extra support is expected to fully compensate the rise in
October's energy bills at least for low-income households, whose
finances have been most affected by the current cost-of-living
crisis, he says. The extra cash is expected to increase GDP by 0.7%
in the second half if all spending is concentrated this year, Tombs
"Accordingly, the risk of recession has fallen
Stock futures edged higher, putting major indexes on track to
extend a recent stretch of gains and snap a punishing losing
Investors will parse data including consumer spending to get a
better gauge of how Americans are feeling. Trading volumes may be
light Friday ahead of the U.S. holiday weekend.
In early New York trading, shares of Dell jumped 12% after
reporting a rise in profit and a decline in some operating
expenses. Ulta Beauty climbed 8% after the retailer raised its
full-year sales and earnings guidance following
better-than-expected first-quarter results.
Gap shares tumbled 16% premarket after the retailer swung to a
loss amid a drop in net sales. Shares of Workday fell 8.4% after it
reported first-quarter adjusted earnings that came up short of
In the bond market, the yield on the benchmark 10-year U.S.
Treasury note fell to 2.750%, from 2.756% Thursday.
Speculation of a possible pause in Fed interest-rate rises in
September "was surely contributing to keeping the dollar soft,"
said ING currency analysts.
In the past week, market interest-rate pricing showed a
reduction in Fed rate expectations of around 10 basis points, while
"the likes of the ECB have seen all but a consolidation of expected
However, the Fed's rhetoric is "still very hawkish" and ING
expects U.S. rate expectations to recover and the DXY Dollar Index
to push back toward 103.00.
Ten-year German Bunds should start to strengthen as inflation
shows signs of easing, said Mizuho's rates strategists and consider
yields above 1% as an attractive level to enter longs.
The market's pricing of a 100 basis point interest rate rise by
the ECB by the end of 2022 seems a "bit excessive," the strategists
said, adding that with flash national and eurozone inflation data
due Monday and Tuesday, "market participants are likely to remain
cautious about putting money to work into the front-end."
Traders dealing in euro corporate bonds are likely to wait for
next week's eurozone inflation data before taking substantial
action, said UniCredit.
Investors potentially will be concerned about duration risk
posing downside risk, particularly to long-dated segments of the
Duration risk, or the risk that a bond's price will drop as
interest rates rise, has been already observed this week when
sovereign, supranational and agency bonds were volatile and widened
by up to four basis points.
Crude futures edged higher, with Brent at a more- than
two-month, as supply uncertainty continued to support prices.
Stephen Innes, managing partner at SPI Asset Management, said
there "is likely a lot of short-term length in crude markets as
speculators...position for the EU Russian embargo bounce," adding
that there may be a reluctance to push the market higher because of
Base metals gained in London on modestly improving overall
market sentiment and despite consumption in Asia remaining weak due
to the Covid-19 lockdowns. But prices were still lower for the
Inventories have moved higher in recent weeks, given the lack of
consumption in Asia, said Fitch. "A recent slew of negative global
economic readings has revived growth concerns, driving industrial
metals back into decline following a muted attempt at recovery
early on in May."
DOW JONES NEWSPLUS
Glencore Said It Revamped Its Compliance Program Following
Glencore PLC said it has revamped its ethics and compliance
program, including boosting its annual compliance spending and
hiring more full-time compliance staff, as the global mining and
trading company settles corruption and bribery charges in the U.S.,
U.K. and Brazil.
The Anglo-Swiss commodities company published a 13-page investor
update on the same day it announced the settlements with various
regulators, saying it has "invested substantial resources" in its
ethics and compliance program and has renewed its commitment to
integrity and transparency.
Pepkor Holdings 1H Operating Profit, Revenue Rose on Organic
Pepkor Holdings Ltd., controlled by Steinhoff International
Holdings NV, said Friday that revenue and operating profit rose in
the first half of fiscal 2022 on organic growth.
The South African retail group said for the six months ended
March 31, operating profit was 5.68 billion rand ($361.6 million)
compared with ZAR4.77 billion a year earlier.
Ukraine Slams Idea of Swapping Land for Peace
KYIV, Ukraine-Ukrainian President Volodymyr Zelensky dismissed
suggestions that his country should cede territory to Russia in
return for peace, comparing them to attempts to appease Nazi
Germany, as Russia stepped up its attacks in Ukraine's east.
With the war in Ukraine now past the three-month mark, there is
debate among Western officials about what it would take to achieve
a cease-fire, and what concessions-including territorial ones-such
a deal might necessitate. But despite Russia's renewed attacks in
Kharkiv and other areas of the east, Moscow has absorbed heavy
losses in both troops and equipment, raising questions of how long
it can sustain the forward thrust of its military campaign in
Russia's Economy Is Tanking but the Ruble Soared. Here's
Sanctions against Russia have pushed its economy into what could
be the biggest decline in decades, but the country's currency has
gone the other way.
The ruble strengthened this week to levels not seen since 2018,
making the currency the second-best performer against the dollar
this year, based on a Dow Jones Market Data analysis of 56
currencies, trailing only the Brazilian real. The ruble has risen
16% against the greenback in 2022 and is up nearly 150% since it
bottomed out days after Russia's invasion of Ukraine three months
Europe's Quest for Alternatives to Russian Gas Hits Obstacles in
Europe is hitting roadblocks as it tries to find alternatives to
Russian gas in the Middle East and North Africa, as talks with big
producers like Qatar, Algeria and Libya have become
The issues that have snarled negotiations range from the pricing
of Qatari gas to stability in Libya and the politics of Western
Sahara, a disputed North African territory. The challenges mark
another indication that Europe will struggle to fully replace
energy from Russia, which supplies 38% of the continent's natural
Israel Deliberately Killed Al Jazeera Journalist, Palestinian
RAMALLAH, West Bank-The Palestinian Authority on Thursday said
an investigation concluded that an Israeli soldier deliberately
shot and killed a Palestinian-American Al Jazeera reporter covering
an Israeli raid in the West Bank this month, a finding Israel's
defense minister immediately denied.
The bullet that killed Shireen Abu Akleh, 51 years old, was a
5.56mm armor-piercing bullet fired from a Ruger mini 14, said
Palestinian Attorney General Akram Khatib at a news conference, a
weapon he said is used often by snipers. Mr. Khatib said the bullet
hit Ms. Abu Akleh from behind with her head tilted down, according
to the autopsy.
China's Industrial Profit Slid in April on Lockdown Impact
BEIJING-China's industrial profit slid in April as the country
grappled with Covid-19 lockdowns in Shanghai and other cities,
which wreaked economic havoc.
Profits at China's industrial firms dropped 8.5% in April,
reversing from 10.6% growth in March, the National Bureau of
Statistics said Friday. Industrial profit increased 3.5% in the
first four months of the year, slowing from 8.5% growth in the
first quarter, the bureau said.
Digital Dollar Could Coexist With Stablecoins, Fed Vice
WASHINGTON-A U.S. central bank digital currency could one day
provide consumers with a level of safety amid a proliferation of
privately-issued digital assets such as stablecoins, Federal
Reserve Vice Chairwoman Lael Brainard told House lawmakers
Ms. Brainard told the House Financial Services Committee that in
the future a central bank digital currency could coexist with and
be complementary to stablecoins by providing a widely available,
government-backed means of payment.
Write to email@example.com
Write to us at firstname.lastname@example.org
We offer an enhanced version of this briefing that is optimized
for viewing on mobile devices and sent directly to your email
inbox. If you would like to sign up, please go to
This article is a text version of a Wall Street Journal
newsletter published earlier today.
(END) Dow Jones Newswires
May 27, 2022 05:45 ET (09:45 GMT)
Copyright (c) 2022 Dow Jones & Company, Inc.
From Jun 2022 to Jul 2022
From Jul 2021 to Jul 2022