European stocks edged higher on Thursday in a subdued session
with U.S. markets closed.
A generally positive mood was supported by the latest Federal
Reserve minutes which showed officials thought they should slow the
pace of interest-rate increases.
However, market analysts don't see the minutes shedding any new
light on the policy debate.
"There wasn't a lot of new information," Oxford Economics said.
"Policy makers appear set to slow the pace of rate hikes. This
mirrors comments from Fed officials since the last meeting and is
consistent with our forecast for a 50 basis point rate hike in
A better-than-expected German Ifo reading, signaling a less
severe recession in the country than originally feared, also
The Ifo business climate index rose to 86.3 points in November
from 84.5 in October. Analysts polled by the WSJ had expected the
index to hit 85.0.
Read German Business Sentiment Improves in November
Stocks to Watch
Credit Suisse's fourth-quarter outflows confirm the situation at
the bank will likely get worse before it gets better, Jefferies
The magnitude of outflows the bank revealed at its update was
surprising, especially at its wealth-management division, where 10%
of assets under management were lost in just six weeks, Jefferies
Further deterioration was expected in the fourth quarter, after
an already poor trend in the second and third quarters, but this is
a significant acceleration, and much worse than forecast.
The update "confirms our concerns that the Credit Suisse ship is
yet to stabilize," Jefferies said, which has a hold rating on the
stock with a CHF3.80 target price.
Read Credit Suisse's Loss May Not Surprise, But Its Size Did
Infineon is seeing strong demand for silicon carbide
semiconductors in industrial applications, UBS said meeting with
the president of Industrial Power Control and the president of
Power & Sensor Systems.
Silicon carbide chips are more resistant and energy-efficient
than traditional ones. Solar, grid-scale battery storage and
electric vehicle charging are driving demand, UBS said.
"Infineon highlighted that new silicon carbide suppliers were
emerging with up to 30% discounts to average price which could
improve profitability," UBS said.
The November eurozone inflation reading is a key data release
ahead of the December European Central Bank meeting, Citi said,
adding that it foresees CPI will post its first decline since
mid-2020. The drop is expected to be driven by energy, but core
dynamics are expected to remain strong, Citi said.
It has forecast the eurozone headline inflation rate will fall
to 10.3% year-on-year in November from 10.6% in October. However,
Citi warned that this might not yet be the start of a proper
"The latest German wage deal is a reminder that the inflation
news flow looks set to remain skewed to the upside," Citi said.
Freight rates for container ships and freight planes will drop
to pre-pandemic levels next year as the appetite for consumer goods
weakens on the back of high prices fanned by inflation, maritime
data platform Xeneta said in its annual report.
"The cost-of-living crisis is eating into consumer spending
power, leaving little appetite for imported goods," Xeneta said.
"We expect ocean freight volumes to drop, possibly by around 2.5%
or even more."
Daily freight rates have declined more than 90% since their peak
last year, and with new vessels hitting the water in 2023,
operators may engage in price wars to attract cargo customers.
ING said lower energy prices and higher-than-expected eurozone
PMIs have boosted European currencies, but this rally may prove
"We remain doubtful that it will be a smooth ride to recovery
for European currencies, and our commodities team continues to see
upside risks for energy prices into the new year despite recent
developments," ING said.
EUR/USD has broken above 1.0400 and may extend its rally to
1.0500-1.0550 in the near-term but the gains could run out of steam
as the year-end approaches with a return to parity likely in
December, ING added.
The dollar was a touch lower in holiday-thinned trade as
investors reacted to Wednesday's weak U.S. PMI data and the Fed's
latest meeting minutes, which showed most Fed officials support
slowing the pace of interest rate rises soon.
"Perhaps some [investors] got cold feet about entering the long
Thanksgiving weekend in the U.S. with a too strong dollar,"
Read Sterling Rises Vs Dollar After Fed Minutes, UK Data
The Swedish krona initially wavered before turning lower after
the Riksbank raised its policy rate by 75 basis points to 2.5%, as
expected, and increased its guidance for future rises but signalled
a slower pace of tightening.
Sweden's central bank now expects rates to reach around 2.8% by
the fourth quarter of 2023, compared with its previous forecast of
2.5%, and then sees rates remaining at that level until the end of
its forecast period in the fourth quarter of 2025.
EUR/SEK rose to a high of 10.9100 after the decision, from
10.8658 beforehand, according to FactSet.
Read more here .
The better-than-expected Ifo data has left bond investors
unfazed, with eurozone yields continuing to fall.
DZ Bank said in the past two weeks, Bund yields have fallen and
eurozone government bond spreads over Bunds have tightened,
reflecting lower key interest rate expectations in the medium
The spread tightening also reflected the fact that potential
political tremors in Italy in particular haven't yet materialized.
"However, fundamental factors argue against an unabated
continuation of the tightening trend."
Many eurozone countries' resolve to increase spending in the
energy crisis will boost the volume of bond issuance in 2023,
while, at the same time, the ECB is increasingly absent as a buyer,
DZ Bank said.
Curve flattening remains the most notable theme in developed
market rates, Mizuho said. Investors seem reluctant to add risk at
the front-end of the curve with the inflation picture "so
In euro rates, the selloff in the two-year segment makes sense
in the context of the ECB raising rates a touch higher than
expected, but also keeping them there for longer, Mizuho said,
expecting long-end rates to be "fairly well" supported, even in the
event of another bout of strong inflation.
"We still expect to see another period of yields moving higher
before year-end, but we may need to wait until next year before a
more definitive re-steepening is possible."
Read Short-Maturity Bonds Broadly Incorporate Interest-Rate Rise
Oil futures edged lower as discussions continue between G-7
leaders on a price cap for Russian crude.
Goldman Sachs said that a higher cap could avoid retaliation
from Russia, with the price much higher than production costs.
Elsewhere, rising Covid-19 cases in China were counterbalanced
by a weakening dollar.
Base metals and gold made modest gains, with sentiment moving to
"risk-on" after the Fed minutes showed most officials favored
slowing rate rises soon.
The dollar weakened following the publication of the
minutes--something which has helped risk assets like
Demand for silver is on course to reach a record high in 2022,
led by jewelry and industrial usage, according to consultancy firm
Demand is set to reach 1.2 billion ounces in 2022, up 16%
year-on-year and above the 12-year average of 1 billion ounces.
Much of this was on higher industrial usage--up 5% to 539 million
ounces-- with strong demand from the photovoltaic sector in
Jewelry and silverware fabrication are forecast to rise in 2022
by 29% and 72%, respectively, to 235 million ounces and 73 million
ounces, driven by India buying.
Metals Focus added that the rise in demand would put the market
into a 194 million ounce deficit, despite a 2% rise in physical
DOW JONES NEWSPLUS
European Energy Ministers Set to Clash Over Proposed Gas-Price
BRUSSELS-European Union energy ministers are gathering to haggle
Thursday over details of a new proposal from the bloc's executive
body for an emergency cap on the price of natural gas.
The meeting convenes as EU diplomats struggle to agree on a
separate, international plan to cap prices paid for Russian oil
around the world.
German Business Sentiment Improves in November
Business confidence in Germany increased in November, beating
expectations, as companies foresee a less severe recession than
The Ifo business-climate index rose to 86.3 points in November
from a revised reading of 84.5 points in October, data from the Ifo
Institute showed Thursday. Economists polled by The Wall Street
Journal had expected the index to come in at 85.0.
Riksbank Lifts Policy Rate to 2.50% From 1.75% and Raises Rate
Sweden's central bank on Thursday lifted its key policy rate to
2.50% from 1.75% and raised its rate path as it continues to fight
stubbornly high inflation.
A majority of economists polled by The Wall Street Journal
before the decision had expected a 75 basis points hike to
EU Fails to Reach Agreement on G-7's Price Cap for Russian
European diplomats clashed over the price to cap Russian global
oil sales on Wednesday as the bloc failed to reach agreement on a
Group of Seven nations mechanism intended to crimp Russian oil
Diplomats involved in and briefed on discussions said they
expected the 27-nation bloc to sign off on the price cap eventually
as they race to put the system in place by Dec. 5, when both the
cap and a European Union oil embargo would enter force. Discussions
are expected to continue on Thursday.
Remy Cointreau Backs FY 2023 View Despite Likely Slower 2H
Remy Cointreau SA on Thursday said it remains confident of its
outlook for the fiscal year, but said growth is set to slow after a
strong first six months.
In the six months to Sept. 30, the French distiller made current
operating profit of 319.3 million euros ($331.9 million,) 27%
higher on year organically, with an operating margin that climbed
1.7 points to 36.8%.
Kingfisher Cuts FY 2023 Profit Views Amid Higher Investments
Kingfisher PLC said Thursday that profit for fiscal 2023 is
expected to be lower than previously guided as the company
increased investments and expenses.
The home-improvement retailer said it currently expects adjusted
pretax profit--the company's preferred metric, which strips out
exceptional and other one-off items--for the year ending Jan. 31 in
the range of 730 million pounds and 760 million pounds ($880
million and $916.2 million). This compares with the company's
previous guidance of around GBP770 million.
Gucci's Creative Chief to Step Down
Alessandro Michele, whose eccentric designs reinvigorated Gucci,
is stepping down as creative director of the Italian luxury brand
as a period of rapid growth peters out.
Parent company Kering SA said in a statement late Wednesday that
Mr. Michele was leaving his post at the fashion house having
"played a fundamental part in making the brand what it is
German Consumers Are Boosting the Economy. These Stocks Stand to
It hasn't received a lot of attention that the outlook for
Germany's economy, Europe's largest, is considerably better than it
was just a few months ago.
Prospects looked dire earlier in the year. Russia's invasion of
Ukraine cut off a significant portion of the country's national gas
supplies. Energy prices spiked, and inflation shot up. That
prompted the European Central Bank to start raising interest rates
for the first time in a decade.
Hackers Temporarily Take Down European Parliament Website
The European Parliament's website was briefly disabled by a
denial-of-service cyberattack on Wednesday, hours after lawmakers
passed a resolution labeling Russia a state that sponsors
European Parliament President Roberta Metsola tweeted that the
institution was "under a sophisticated cyberattack. A pro-Kremlin
group has claimed responsibility."
China Recovery Hopes Crushed by Record Covid Outbreak as
SINGAPORE-China's worst Covid-19 outbreak is squashing hopes for
an economic rebound and fanning concern about disruption to the
world's supply chains, heaping more pressure on a global economy
that is already losing speed as central banks ratchet up interest
rates to beat back inflation.
The record number of new cases and the authorities' tough
response have extinguished hopes that China was inching toward
reopening. Those hopes were stoked earlier this month when the
government published a 20-point plan to refine some virus controls,
such as reducing quarantine periods and easing restrictions on
close contacts of confirmed cases.
Fed Minutes Show Most Officials Favored Slowing Rate Rises
WASHINGTON-Most Federal Reserve officials thought they should
slow the pace of interest-rate increases after approving a
0.75-percentage-point rate rise at their meeting earlier this month
to battle high inflation.
Bank of Korea Raises Rate 25 Basis Points, Easing Pace of
South Korea's central bank has eased the pace of interest-rate
increases to curb high inflation, lowering its 2023 growth and
The Bank of Korea raised the benchmark seven-day repurchase rate
by 25 basis points to 3.25% on Thursday, as expected, after an
outsized 50-basis-point increase in October.
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(END) Dow Jones Newswires
November 24, 2022 05:52 ET (10:52 GMT)
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