European Midday Briefing : Stocks Gain With U.S. Data in Focus

MARKET WRAPS

Stocks:

European stocks extended their gains on Tuesday, at the start of a week packed with economic data that should offer more clues on the outlook for central bank policies.

"Focus is on U.S. jobs and inflation data out this week for clues into the resilience of the U.S. economy as well as the Fed's next move," Interactive Investor said.

Economic Insight

Sluggish Swedish growth is definitely an argument for the Riksbank to proceed with caution, but with the weak krona and inflation that is still too high, the central bank will proceed with a rate increase in September, Nordea said. Read more.

U.S. Markets:

Stock futures wavered ahead of consumer-confidence and job-openings data.

Later this week, investors will eye the Federal Reserve's preferred gauge of inflation-the personal-consumption expenditures price index-and the August employment report.

Meantime, the benchmark 10-year Treasury yield edged below 4.2%.

Shares of Hawaiian Electric rose 7% in premarket trading, extending gains after it pushed back against claims its power lines caused the deadly Lahaina wildfire.

HP will report earnings after markets close on Tuesday.

Follow WSJ markets coverage here .

Forex:

Trading in the dollar has steadied following the keenly-awaited Jackson Hole meeting, including the Powell speech, as it contained no major surprises, with calm returning to the market, Natixis Research said.

Bonds:

Euro-denominated corporate bonds are likely to trade in small ranges this week ahead of the release of the eurozone CPI data on Thursday and U.S. jobs data on Friday, UniCredit Research said.

"While the positive tone in equities futures this morning argues in favor of the risk-on mood in the European corporate credit market, given their tight levels [notably in high yield non-financials], we see very limited scope for spread tightening." they

Eurozone money-supply data released this week showed slower bank-lending growth to corporates, raising the odds of more corporate bond issuance and spread widening, UniCredit said.

"We see scope for high-yield credit spread widening by some 20 basis points from current levels until year-end."

Energy:

Oil prices were steady with investors waiting to see if anything comes from speculation the U.S. is considering easing sanctions against Venezuela and Iran, which could open the door to more crude exports.

Meanwhile, weakness in China's economy and concerns the Fed could yet still raise interest rates are hanging over oil's demand prospects.

"The demand outlook in the coming months remains clouded with uncertainty and will in our opinion cap the upside potential," Saxo said.

European natural gas prices eased after registering a 10% jump as workers at LNG export facilities in Australia said they planned to begin rolling stoppages next month. Read more .

Metals:

Base metals and gold rose, with ING highlighting that China introduced support measures on Monday for transport, property and other infrastructure projects. "These measures have helped broader sentiment in financial markets."

ING added that gold has also gained after the Federal Reserve indicated rates would hold steady in September.

"However, we will need to keep a close eye on U.S. data releases in the coming weeks, which could shed more light on what the Fed may do."

DOW JONES NEWSPLUS

EMEA HEADLINES

German Consumer Sentiment to Worsen in September on Fears of Squeezed Incomes

Consumer confidence in Germany weakened in data for September, reversing August's improvement, reflecting gloomier income expectations and prospects for the country's economy.

Germany's forward-looking consumer-sentiment index forecasts confidence to tick down to minus 25.5 in September, from a revised minus 24.6 in August, according to data from market-research group GfK published Tuesday.

Standard Chartered to Sell Aviation Finance Business for $700 Mln

Standard Chartered agreed to sell its global aviation finance leasing business for an initial $700 million in cash to Aircraft Leasing Company, or AviLease.

The Asia-focused lender on Tuesday said the consideration could be adjusted depending on the net asset value of the business at completion. The disposal is taking place through the sale of shares in relevant subsidiaries and minority equity interests held by the bank.

Germany Is Losing Its Mojo. Finding It Again Won't Be Easy.

BERLIN-Two decades ago, Germany revived its moribund economy and became a manufacturing powerhouse of an era of globalization.

Times changed. Germany didn't keep up. Now Europe's biggest economy has to reinvent itself again. But its fractured political class is struggling to find answers to a dizzying conjunction of long-term headaches and short-term crises, leading to a growing sense of malaise.

Q&A With Volvo Group's Karin Svensson

Volvo Group is a global company in one of the hardest to decarbonize sectors: It makes trucks, buses and construction and marine equipment, but not passenger cars. The Swedish heavy transport group generated 287 million metric tons of CO2 equivalent last year-almost 95% of that generated by the use of its products-but it aims to have net zero emissions by 2040.

In charge of that lift is Karin Svensson, the company's chief sustainability officer. The 23-year veteran of the company took time out to talk about the broad electrification of transport, the complexity of decarbonization, the one carbon-heavy habit she can't quit (yet) and the difficulties of meeting net-zero goals that depend on multiple parties for EV incentives and infrastructure.

GLOBAL NEWS

Chinese Stocks Are in a Slump-and Value Investors Are Excited

Investors in Chinese stocks used to bet on growth. Now, they are hunting for bargains.

Portfolio managers say that investors who are still eager to get exposure to China are increasingly turning to value investing. That is a style of stock picking that focuses on finding shares trading below what they are really worth-based on several different measures-rather than looking for companies with big growth potential.

The Race to Succeed President Biden Is Heating Up on the 2024 Campaign Trail

High-profile Democratic governors are stumping for President Biden's 2024 re-election campaign and simultaneously auditioning to become the party's next standard-bearer.

Their efforts signal they are unlikely to cede that role in 2028 to Vice President Kamala Harris, whose sluggish approval ratings have raised doubts among some donors and party officials about whether she can effectively succeed Biden.

U.S., Allies Seek Long-Term Military Aid for Ukraine to Show West's Resolve

The Biden administration and its European allies are laying plans for long-term military assistance to Ukraine to ensure Russia won't be able to win on the battlefield and persuade the Kremlin that Western support for Kyiv won't waver.

The effort, building on commitments made at a Group of Seven leaders meeting on the sidelines of the North Atlantic Treaty Organization summit in July in Vilnius, Lithuania, so far involves bilateral negotiations between the U.S. and Ukraine and the U.K. and Ukraine. About 18 non-G-7 countries have signed up to the group's pledge to provide long-term assistance to Kyiv, including the Netherlands, Sweden and other European countries.

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

08-29-23 0554ET