Thursday, July 18, 2024

Gas profits and worries keep Europe calm


  • European shares calmed as fears escalated over the gas crisis
  • Big List of Technology Dividends Due on Wall Street
  • Bond yields fall ahead of expected Fed rate hike

LONDON (Reuters) – European shares fell and bond markets in the region rebounded on Tuesday as some disappointing gains, a looming U.S. interest rate hike this week and an escalating gas crisis kept the mood on guard.

Asia rebounded overnight due to new Chinese plans to tackle its real estate crisis and technology giant Alibaba’s application for a primary listing in Hong Kong, but Europe could not continue to do so.

Pan-European STOXX 600 Index (.stoxx) faltered as a 6% rise in commodity stocks and a profit upgrade from consumer giant Unilever was offset (UBSG.S) Plunge into UBS stocks Read more and more broad recession fears.

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“The key question we have as these earnings come in is how aggressively these (consumer-facing) companies have pricing,” said Krishna Mohanraj, International Equity Portfolio Manager, Diamond Hill, referring to pressures of rising inflation.

Shares of US retailer Walmart fell 10% after the bell after it lowered its forecast on Monday due to those exact issues. Read more.

But Unilever, which makes everything from laundry detergent to ice cream, raised its full-year profit forecast in Europe due to what CEO Alan Jope said was “robust pricing to mitigate input cost inflation.” Read more

European Union countries are also preparing to agree to weak emergency proposals to reduce their gas use. Russian Gazprom (GAZP.MM) He warned on Monday that he will cut flows further this week due to another maintenance issue. Read more

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Dutch and British “Next Day” prices jumped 8% and 16.5% respectively on Tuesday, and the drop in eurozone bond yields in fixed income markets came with analysts now increasingly pricing in a recession in the bloc.

“The potential forced cut of 15% that all member states will have to stick to is not very popular among many members,” said Jim Reed of Deutsche Bank. “Expect a lot of concessions and concessions to emerge if a plan is agreed that can move forward.”

Investors are also waiting for a possible 75 basis point Fed rate hike on Wednesday – with markets pricing around 10% the risk of a bigger rally, as well as waiting to see if economic warning signs lead to a shift in rhetoric.

The International Monetary Fund is due to publish its closely watched global outlook later that is expected to point to slower growth and higher inflation.

“We’re inclined to the view that 75 basis points is more likely, but it won’t be the end unless they see some demand destruction and some easing in inflation,” said John Milroy, investment advisor at Ord Minute.

technical problems

Global tech companies Microsoft and Google reported the Wall Street Bell announcement later, followed by owner Facebook Meta tomorrow and Apple and Amazon on Thursday.

Deutsche Bank’s Reid noted that it adds up to $7.5 trillion in market capitalization. “While these five stocks fell between about -13% (Apple) since the beginning of the year to about -50% (Meta), with the other three dropping by about -20 to -25%, that number was closer to $10 trillion at the start of the year. general”.

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GM, NXP Semiconductors, Raytheon Technologies, Coca-Cola and McDonald’s will also report later.

In Asia, MSCI’s broadest regional index outside Japan (MIAPJ0000PUS.) had rebounded 0.5%.

Chinese stocks jumped after reports that the country will create a fund of up to $44 billion to help real estate developers. Read more

Hong Kong’s Hang Seng Index (.HSI) Closed 1.7% higher on Alibaba news (.CSI300) Although the Japanese Nikkei index (.N225) It decreased 0.16%.

In currencies, the dollar has been flat not far from recent highs as uncertainty continues to swirl around the interest rate and economic outlook. / FRX

The euro has been hovering around $1.0215, but it has been surrounded by uncertainty over Europe’s energy security, which was not helped by an imminent cut-off in Russian gas flows westward. Read more

The yen settled at 136.54 per dollar. The US dollar index, which touched a 20-year high this month, fell slightly to 106.380.

Oil prices rose further on expectations that Russia’s cut in natural gas supplies to Europe could encourage a switch to crude, with Brent crude futures up 1.3% at $106.45 a barrel, and US crude up 1.25% at $97.92 a barrel. Read more

The benchmark 10-year Treasury yield fell to 2.875% and the German benchmark 10-year bond yield fell to a two-month low of just under 1% as growth concerns gave support to bonds.

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Additional reporting by Ken Woo from Hong Kong. Editing by Edmund Kelman

Our criteria: Thomson Reuters Trust Principles.

Rosario Tejeda
Rosario Tejeda
"Infuriatingly humble analyst. Bacon maven. Proud food specialist. Certified reader. Avid writer. Zombie advocate. Incurable problem solver."