UKX FTSE 100 Index

MARKET WRAPS

Stocks:

European stocks moved higher on Thursday, helped by gains for heavyweight mining and oil-linked stocks.

London-listed energy majors Shell and BP gained from oil prices climbing on concerns over further military confrontations in the Middle East and disruptions to global supply following explosions at a ceremony in Iran, killing nearly 100 people.

Other Stocks on the Move

JD Sports shares topped the FTSE 100 fallers , down 20% after a profit warning following worse-than-expected trading in the run-up to Christmas.

Next PLC shares were faring better than JD Sports, as it is better positioned to capture the "essentials" market for coats, jumpers and so on, AJ Bell said.

U.S. Markets:

Stock futures pointed higher after equities started off the first two trading days of 2024 with losses.

The yield on the 10-year Treasury note edged closer to 4% as investors mulled the outlook for rate cuts in the coming months.

Stocks to Watch

Intel named Justin Hotard as executive vice president and general manager of its data-center and AI group, effective Feb. 1. Shares rose 0.6% premarket.

Meta CEO Mark Zuckerberg sold about $428 million of company stock over the final two months of 2023, according to a regulatory filing. Shares were rising 0.4% premarket.

Forex:

The euro was firmer as the dollar turned lower, but difficult economic conditions in the eurozone might constrain its progress, CPT Markets said.

The European Central Bank could face mounting pressure to reduce interest rates if economic indicators continue to deteriorate, weakening the euro, CPT said.

Money markets price in 160 basis points of ECB rate cuts throughout the year, according to Refinitiv data.

German inflation data on Thursday could impact the euro, while eurozone inflation figures on Friday will be key for highlighting the path of inflation, CPT added.

Commerzbank said the dollar has risen at the start of 2024, recovering some of its recent losses but without any apparent trigger, and its gains could be curtailed without strong U.S. economic data.

"The dollar correction is likely to run out of steam unless the move is supported by data."

Friday's non-farm payrolls data for December will be key, where Commerzbank sees a risk of a weaker figure, while Thursday's ADP private payrolls could also "surprise to the downside."

Bonds:

Below-consensus inflation data and shaky risk sentiment should keep Bunds underpinned, Commerzbank Research said.

"Moderate increases in German and French CPIs could add to the latest risk-off bid in Bunds, while supply is so far being absorbed smoothly."

A rise in inflation in the German state of North Rhine-Westphalia to 3.5% in December from 3.0% in November sets the tone that the pan-German inflation rate is set to pick up in December, primarily due to base effects, "but the increase looks set to remain moderate," Commerzbank added.

Energy:

Oil prices rose around 1% on mounting concerns over global supply as tensions in the Middle East continued to grow.

The shutdown of Libya's largest oilfield due to local protests fuelled market concerns over tight supply.

European natural gas prices were higher as the latest weather forecasts pointed to a drop in temperatures this month, lifting demand for the fuel on the back of higher heating and electricity consumption.

"We expect prices to rise in the current year, as EU gas consumption should recover and there is a risk of tension on the LNG market and the remaining pipeline supplies from Russia drying up," Commerzbank Research said.

Metals:

Base metals were mixed while gold edged higher as traders waited for Friday's U.S. nonfarm payroll report to gauge which way Federal Reserve policy will move this year.

"Investors are questioning if the Fed will cut interest rates six times in 2024 if the economy is heading for a soft landing, i.e., maybe five cuts is more realistic," Peak Trading Research said.

"This slightly hawkish shift in Fed expectations has supported the dollar this week, a bearish headwind for our dollar-denominated commodity markets," Peak added.

Wilson Asset Management Leaders said too much lithium supply may be cause for concern.

"We did buy into the lithium space," it said, but added that the fund has been selling some of its lithium stock holdings.

"There's a huge amount of supply out there," it said, adding that WAM Leaders is a "little bit cautious on lithium."

Iron-ore prices are now likely to average $150/ton over the next three months, Citi said, representing an upgrade on its previous forecast of $140/ton.

China is likely to step up targeted support for specific areas of the real-estate sector, which would be supportive of steel and iron ore demand, Citi added.

EMEA HEADLINES

Next PLC Hikes Profit Forecasts Again After Strong Christmas Performance

Next PLC raised its pretax profit guidance after sales in the pre-Christmas business period were better than it expected.

The fashion retailer-which is seen as a bellwether for the sector in the U.K.-said Thursday that it now expects pretax profit of 905 million pounds ($1.15 billion) for fiscal 2024 compared with previous guidance of GBP885 million. Full-price sales for the year ending Jan. 27 are seen at GBP4.78 billion compared with GBP4.74 billion previously.

JD Sports Fashion Cuts Pretax Profit View After Revenue Growth Missed Expectations

JD Sports Fashion cut its forecast for fiscal 2024 headline pretax profit after revenue growth in the 22 weeks to Dec. 30 fell below expectations.

The London-listed fashion retailer said Thursday that organic revenue growth on a constant-currency basis was 6% in the period, with like-for-like growth of 1.8%, which was slightly below its expectations.

U.S. and BAE to Bring Back Popular Howitzer After Success in Ukraine

The U.S. Army is resurrecting production for the M777 howitzer after its heavy use by Ukraine brought new demand for a big gun whose most recent order was five years ago.

The M777's production comeback highlights how the war in Ukraine is helping to reshape the global armaments industry, with battlefield use of artillery and missile-defense systems, in particular, leading to a surge in demand.

GLOBAL NEWS

The Hidden Force Pushing Mortgage Rates Down

A key factor that pushed up mortgage rates over the past two years is now starting to pull them down.

Average 30-year fixed mortgage rates have been higher than usual relative to the benchmark Treasury yields they typically track. But that extra differential, or spread, has been shrinking for eight straight weeks. It is now at its lowest since March.

Why Companies Still Aren't in a Firing Mood

A lot of people spent much of last year convinced that the U.S. was on the cusp of a recession-including those in charge of hiring and firing workers.

Lately, though, with the economy continuing to grow even as inflation has been coming down, those recession worries have moderated. This might not lead to a reacceleration of job growth, but it could set the conditions for the labor market to not cool as much over the next year as many economists and Federal Reserve policymakers expect.

Stocks' Bad Start to 2024 Has Forecasters on Edge

Stocks are off to a bumpy start in the early days of 2024. Proponents of the January Barometer are hoping for a turnaround because they believe the market's performance in the first month of the year sets the tone for the rest.

Major indexes have pulled back in the first two sessions after ending 2023 with a bang. The S&P 500 is down 1.4%, and the Dow Jones Industrial Average has declined 0.7%. The Nasdaq Composite has dropped 2.8%, its worst start to a year since 2005.

Russia Moves Forward With Plans to Buy Iranian Ballistic Missiles

Russia is planning to buy short-range ballistic missiles from Iran, a step that would enhance Moscow's ability to target Ukraine's infrastructure at a critical moment in the conflict, U.S. officials said.

Moscow's plans have provoked deep concern within the Biden administration and come as support wanes in Congress for continued U.S. military assistance for Ukraine. Lawmakers have yet to pass a bill that would provide additional funding for Ukraine.

U.S. Seeks Drone Bases in Coastal West Africa to Stem Islamist Advance

NAIROBI-The U.S. is seeking to base military drones along the West African coast in an urgent effort to stop the spread of al Qaeda and Islamic State in the region, according to American and African officials.

The U.S. is holding preliminary talks to allow American unarmed reconnaissance drones to use airfields in Ghana, Ivory Coast and Benin, countries on the Atlantic Ocean. Relatively stable and prosperous, the three coastal countries, along with Togo, now find themselves threatened by Islamist militants surging south from Mali, Burkina Faso and Niger-three beleaguered nations in the Sahel, the semidesert band south of the Sahara.

Write to ina.kreutz@wsj.com

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(END) Dow Jones Newswires

January 04, 2024 06:25 ET (11:25 GMT)

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