We start the analysis with European stock exchanges:
EQT jumps after first half results Unilever falls on raw material costs ECB expected to promise longer support
By Sruthi Shankar
July 22 (.) – European stocks extended their gains for a third session on Thursday, as signs of a strong corporate earnings season and expectations that the European Central Bank (ECB) will remain in a easing stance soared. the demand for risk actions.
The pan-European STOXX 600 Index rose 0.7%, fully recovering from its worst drop in 2021 earlier this week.
Travel and leisure stocks topped sector gains again, with a rise of 2.9%. The index had hit a five-month low on Monday on fears of the growing spread of the Delta variant.
In earnings-driven moves, Swedish private equity firm EQT soared 11.9% to the top of the STOXX 600 after posting upbeat earnings in the first half, while Swiss engineering firm ABB hit its highest level since November 2007 after doubling its sales prospects for the year.
“Right now, it’s not so much about a big drop in equities. It’s more about individual stocks and true stock selection, “said David Haynal, portfolio manager at Eric Sturdza Investments.
“This season of results is going to be important to judge that.” Consumer goods giant Unilever Plc fell 4.4% after cutting its forecast for full-year operating margin due to rising raw material costs.
Of the quarter of STOXX 600 companies that have reported so far, 61% have exceeded analyst earnings expectations, according to Refinitiv IBES data. Typically 51% exceed profit forecasts.
The benchmark STOXX 600 index hit record highs last week on optimism about the strong recovery in economic growth and earnings. However, markets have recently become volatile amid concerns about rising inflation and the resurgence of virus cases.
Eurozone stocks rose 1% ahead of the ECB’s policy decision, scheduled for 1145 GMT, in which it is almost certain to promise an even longer period of stimulus to meet its pledge to boost inflation.
The ECB released a modified inflation target earlier this month that could try to temporarily push inflation above its 2% target after a decade of failures.
“The question will be whether the ECB is going beyond what the markets already expect: the fall in bond yields and the weakening of the euro in recent weeks suggest that some relaxation from the ECB is already taking place,” Paul said. Jackson, Invesco’s global head of asset allocation research, in a note.
France’s Publicis rose 3.5% after forecasting that its financial sector will return to pre-pandemic levels this year.
Italy’s Monte dei Paschi rose 5.7% after the lender and its former main investor reached a preliminary agreement to resolve their legal disputes.
(Information from Sruthi Shankar in Bengaluru; edited by Shailesh Kuber and Arun Koyyur) Translate serenitymarkets.com
Let’s now look at global markets
Markets are betting on ECB update at 1145 GMT MSCI Asia ex-Japan index rises 1% as virus nervousness wanes Oil falls as crude stocks rise in US Gold and dollar give way before the return of the appetite for risk
By Huw Jones
LONDON, July 22 (.) – Stocks hit record highs again in Europe on Thursday as investors bet the European Central Bank will keep its stimulus taps wide open as long as COVID remains a threat to growth.
The revival of appetite for riskier assets came as fears lessened that the Delta variant of COVID-19 could seriously slow the economic recovery.
The STOXX index of the 600 main European stocks rose 0.6% to 456.53 points, and was again a considerable distance from its all-time high of 461.38 points, reached last week.
Investors’ attention was focused on the ECB in Frankfurt.
“The ECB is going to do exactly what the market expects,” said Michael Hewson, chief market analyst at CMC Markets.
“In light of the recent events in Western Europe, the floods, the last thing Europe needs at the moment is a tightening of monetary policy,” Hewson said, referring to last week’s devastating floods in Germany and Belgium that caused the death of more than 180 people.
Italy’s borrowing costs fell to their lowest level in more than three months before the ECB meeting, the results of which are expected at 1145 GMT, followed by a press conference by President Christine Lagarde at 1230 GMT.
Investors will scrutinize their guidance on inflation as the debate continues between central bankers in Europe and the United States about when to curb the huge stimulus of the pandemic era.
“Markets are caught in a pincer movement between concerns about higher inflation and lower growth, and that will continue,” said CMC’s Hewson.
ASIA’S ACTIONS SHINE
Asian stock markets headed to their best day in two months on Thursday, although growth-sensitive currencies struggled to rise, signaling lingering doubts about the recovery.
MSCI’s broader index of Asia-Pacific stocks outside of Japan last rose 1.2%, its biggest daily jump since late May, with markets in the green from Seoul to Sydney.
The Japanese markets were closed for the holidays.
The positive mood in Asia followed a rally on Wall Street.
S&P 500 futures were only slightly higher, suggesting that the momentum of the rally in the United States is fading.
There was no obvious catalyst for the recent stock rebound, nor for the slide on Friday and Monday, although a study on Wednesday showed that the Pfizer and AstraZeneca vaccines were effective against the Delta coronavirus variant.
“From time to time investors look for reasons to take some profits and that’s what we saw,” said Jun Bei Liu, portfolio manager at Tribeca Investment Partners in Sydney, adding that compared to 12 months ago, there are now quite a few viable vaccines.
Hong Kong led gains in Asia, with banks HSBC and Standard Chartered breaking out of their multi-month lows to lift the Hang Seng 1.7%. Heavily indebted Chinese property developer Evergrande rose 8% after saying it had resolved legal disputes with a lender.
The Australian and New Zealand dollars were weighed down by the closings.
The dollar index stood at 92.758, below Wednesday’s three-month high of 93.194, and the euro held steady, just above recent lows at $ 1.1793. The yen, which is a safe haven, suffered small losses across the board.
Interest rate markets were sluggish in Asia, with reduced holiday trading in Tokyo, leaving the 10-year US Treasury yield at 1.2716%.
Oil prices fell after an unexpected rise in crude inventories in the United States, although they retained most of Wednesday’s sharp rise, their biggest one-day gain in three months. Brent crude futures were down 0.2% to $ 72.08 a barrel, but by Wednesday they had gained more than 4%.
Gold fell 0.2% to $ 1,799 an ounce as appetite for safer assets weakened.
Cryptocurrencies held firm after rebounding from lows when Tesla boss Elon Musk said the automaker would likely return to accepting bitcoin payments after due diligence on its energy use.
Bitcoin was barely trading at $ 32,135.
(Additional reporting by Tom Westbrook; Editing by Ana Nicolaci) Translate serenitymarkets.com