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EUROPEAN MIDDAY BRIEFING - Stocks Gain as Traders -2-

01/19/2022 | 06:53am EDT

"It had already become apparent that a rebound of the 10-year Bund yield above zero would not be too long in coming," he said. Downward pressure on bond prices and corresponding upward pressure on yields is currently coming primarily from the U.S. where there are increasing signs that the Fed is likely to herald the turnaround in key interest rates in just a few weeks, Voelker added.

High inflation rates and monetary policy turnaround by the Fed and other major central banks are pushing bond yields higher almost everywhere in the world, said Christian Kopf, head of fixed income portfolio management at Union Investment.

"The eurozone is no exception," he said, after the 10-year German Bund yield turned positive for the first time since May 2019. "But here [in the eurozone] the rise in yields has been flatter and slower than in other parts of the world," he said.

He expects the rise to remain flatter and slower because inflation in the eurozone is still relatively moderate, especially compared with the U.S., and also because the European Central Bank is much more cautious than its counterparts in tightening monetary policy.


Oil prices extended gains after the International Energy Agency, in its monthly report, raised its forecasts for global oil demand growth in 2021 and 2022. Prices had been tracking lower ahead of the report's release and had fallen as low as $87.63 a barrel.

The IEA said that 2022 should be the year that oil demand returns to pre-pandemic levels. Its latest forecast reaffirmed the view that the Omicron variant of Covid-19 had a minimal impact on demand.

The agency noted that the variant's rapid spread but limited severity could prove positive for demand by increasing global resistance to the virus without provoking strict lockdowns.

Gold prices rose after U.K. inflation data showed prices rose at the fastest rate in 30 years in December. Gains are likely capped by expectations that high inflation will be followed by policy tightening from global central banks, said Rupert Rowling, an analyst at Kinesis Money.

"A high inflation environment should prove positive for gold... However, with central banks across the world expected to increase interest rates to tackle inflationary pressures, this presents a headwind," he said.

Base metals prices also rose supported by a weaker dollar.

Divisions within the Democratic Republic of Congo's ruling party will add headwinds to policymaking in the world's No.1 producer of cobalt, a key ingredient in electric vehicle batteries, said Fitch Solutions.

This week's resignation of the first vice-president of Congo's national assembly, Jean-Marc Kabund, is another indicator of worsening instability in a country that produces a third of the world's cobalt, which could add pressure on the global battery supply chain.

"Due to the already tight nature of the global battery supply chain, any disruption to cobalt production in the DRC will have a noticeable impact on battery supplies globally," the firm said.

"The latest events point to continued instability between the cabinet and parliament over the next few quarters."


German Benchmark Bond Yield Turns Positive for First Time Since 2019

Europe's most closely watched government bond yield turned positive for the first time since 2019, part of a broad readjustment by investors to rising inflation and the global economic rebound from the pandemic.

The yield on the 10-year German bund rose as high as 0.021% on Wednesday after trading in negative territory for over 30 months. It then eased down to 0.010%. Bund yields had been as low as minus 0.841% in March 2020.

UK Inflation Accelerated to a Three-Decade High in December

Consumer prices in the U.K. rose at their quickest pace in almost three decades in the year through December on supply-chain disruptions and higher energy costs.

The consumer price index--which measures what consumers pay for goods and services--increased 5.4% on the year in December, up from a 5.1% rise in November, the Office for National Statistics said Wednesday. December's annual inflation rate is the highest since March 1992.

Oil Demand to Exceed Pre-Covid Levels in 2022, IEA Says

Global oil demand will exceed pre-pandemic levels this year thanks to growing Covid-19 immunization rates and as recent virus waves haven't proved severe enough to warrant a return to strict lockdown measures, the International Energy Agency said Wednesday.

In its monthly oil market report, the IEA hiked its oil demand growth forecast for the coming year by 200,000 barrels a day, to 3.3 million barrels a day. The Paris-based agency also raised its demand growth forecasts for 2021 by 200,000 barrels a day to 5.5 million barrels a day.

Richemont Shares Surge as 3Q Sales Promise Higher FY 2022 Earnings

Compagnie Financiere Richemont SA shares climbed in early trade Wednesday after the Swiss luxury-goods group posted consensus-defying quarterly sales, heralding higher full-year earnings.

At 0827 GMT, shares were trading 7% higher at CHF143.40, making the group one of the biggest winners on the Stoxx 600 index of Europe's biggest companies.

ASML Holding 4Q Net Profit, Sales Rose on Year

ASML Holding NV on Wednesday reported increased sales and net profit for the fourth quarter of 2021, but warned that sales for first quarter of 2022 will be lower due to the delayed recognition of shipments.

The Dutch semiconductor-equipment maker said the recognition of around 2 billion euros ($2.27 billion) of first-quarter shipments will be delayed into later quarters as it is introducing a fast-shipment process amid high demand.

Burberry Upgrades FY 2022 Guidance on 3Q Sales Acceleration

Burberry Group PLC said Wednesday that retail revenue and comparable store sales rose in the third quarter of fiscal 2022 as it benefited from strong growth in Mainland China and the Americas, driven by new and younger customers.

The British luxury-goods company left its medium-term guidance--for the three-year period ending in fiscal 2024--for high single-digit topline growth unchanged and said it currently expects to close the financial year with adjusted operating profit growth in the region of 35% when compared with the previous year.

BHP Metallurgical Coal Operations Disrupted by Australia Covid-19 Surge

BHP Group Ltd. said a surge in Covid-19 cases in Australia is causing a shortage of workers at its coal pits that will likely constrain how much steelmaking coal the world's No. 1 miner can produce in its fiscal year.

BHP, which in eastern Australia runs the world's biggest metallurgical coal export operations in joint venture with Mitsubishi Corp., on Wednesday reported an 8% fall in first-half production of the commodity, to 17.7 million metric tons. That prompted the miner to downgrade its full-year production forecast to 38 million-41 million tons, from a prior 39 million-44 million ton estimate.

Pearson Expects Increased 2021 Sales, Adj Operating Profit

Pearson PLC said Wednesday that it expects to report increased sales and adjusted operating profit for 2021.

The FTSE 100 education company said group sales are expected to be 8% higher on year, as sales at its assessment-and-qualifications division--its largest business--were up 18%.

Antofagasta Expects Higher Costs in 2022; 2021 Output in Line With Guidance

Antofagasta PLC on Wednesday warned that its operational costs will jump this year, and reported that production for 2021 was in line with its guidance.

The Chile-based copper-mining company forecast net cash costs of $1.55 a pound for 2022. This would be up from $1.20 a pound last year, reflecting lower production and increased input costs, especially sulphuric acid.


Sony Braces for Microsoft's 'Pay-to-Win' Strategy

Microsoft is flashing its wallet to bulk up in games. That adds up to a fearsome boss battle for Sony, Microsoft's rival in videogame consoles.

Bitcoin Sags in 2022 Under Weight of Stock Selloff and Fed Policy

The Federal Reserve is casting a shadow over cryptocurrencies.

Like stocks, cryptocurrencies have extended a selloff to start the year because of expectations that the central bank will raise interest rates as early as March.

Big Tech and Foes Spar Over Bill to Curb Market Power of Dominant Internet Platforms

WASHINGTON-Big technology companies and their critics are ramping up lobbying efforts in Congress this week as a key Senate panel takes up legislation that seeks to blunt the market power of dominant tech platforms.

The antitrust legislation, set to be considered by the Senate Judiciary Committee Thursday, would bar dominant online platforms such as Inc.'s e-commerce site and Alphabet Inc.'s Google search engine from preferring their own goods and services over other companies.

China Notifies Firms of Tougher Investment Rules for Big Tech

SINGAPORE-China has notified some companies of new rules that require the country's biggest internet firms to seek approval for investment deals, a mechanism that is likely to curb domestic technology giants from growing even bigger through acquisitions, according to people familiar with the issue.

The country's top internet regulator, the Cyberspace Administration of China, recently established a new mechanism that requires internet companies to obtain formal approval for investment deals if they have 100 million users or more or have posted revenue in the previous year of at least 10 billion yuan, equivalent to $1.57 billion, the people said.

Oil Demand to Exceed Pre-Covid Levels in 2022, IEA Says

Global oil demand will exceed pre-pandemic levels this year thanks to growing Covid-19 immunization rates and as recent virus waves haven't proved severe enough to warrant a return to strict lockdown measures, the International Energy Agency said Wednesday.

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01-19-22 0652ET

Stocks mentioned in the article
ChangeLast1st jan.
ALPHABET INC. -5.66% 2106.09 Delayed Quote.-23.03%
ANTOFAGASTA PLC 0.10% 1452 Delayed Quote.8.37%
ASML HOLDING N.V. -2.26% 509.2 Real-time Quote.-26.28%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) 0.01% 0.70873 Delayed Quote.-2.75%
BHP GROUP LIMITED -0.06% 47.8 Delayed Quote.15.25%
BITCOIN (BTC/EUR) -4.92% 27229.6 End-of-day quote.-35.22%
BITCOIN (BTC/USD) -3.93% 29075.7 End-of-day quote.-39.09%
BRITISH POUND / US DOLLAR (GBP/USD) -0.40% 1.2518 Delayed Quote.-7.59%
BURBERRY GROUP PLC -2.80% 1577 Delayed Quote.-10.73%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) -0.30% 0.77956 Delayed Quote.-1.40%
COMPAGNIE FINANCIÈRE RICHEMONT SA 0.52% 92.98 Delayed Quote.-32.46%
EURO / US DOLLAR (EUR/USD) 0.36% 1.07247 Delayed Quote.-7.05%
FTSE 100 -0.39% 7484.35 Delayed Quote.1.75%
GOLD 0.60% 1864.9 Delayed Quote.0.93%
INDIAN RUPEE / US DOLLAR (INR/USD) 0.04% 0.012904 Delayed Quote.-4.36%
LONDON BRENT OIL 0.80% 113.73 Delayed Quote.44.68%
MICROSOFT CORPORATION -1.10% 257.86 Delayed Quote.-22.50%
MITSUBISHI CORPORATION 0.64% 4417 Delayed Quote.20.18%
MSCI SINGAPORE (GDTR) -1.21% 5577.06 Real-time Quote.-11.17%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) 0.01% 0.64467 Delayed Quote.-6.09%
ON SEMICONDUCTOR CORPORATION -2.93% 54.25 Delayed Quote.-17.71%
PEARSON PLC -0.42% 756 Delayed Quote.23.81%
SONY GROUP CORPORATION -0.70% 11370 Delayed Quote.-20.90%
STOXX EUROPE 600 NR -1.14% 988.17 Delayed Quote.-9.02%
UNITED STATES DOLLAR (B) / CHINESE YUAN IN HONG KONG (USD/CNH) -0.06% 6.65705 Delayed Quote.5.35%
WTI 0.33% 110.129 Delayed Quote.46.38%
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