MARKET WRAPS
Stocks:
European stocks were higher again on Wednesday on hopes that central banks may have reached the end of their tightening cycle.
The FTSE 100 rose 1.6%, outperforming the other European indexes, on better-than-expected inflation data, easing fears about how much more the Bank of England will need to raise interest rates.
Read U.K.'s Stubborn Inflation Means More Pain for Homeowners, Renters
Additionally, investors looked to more big U.S. earnings, from the likes of Goldman Sachs, Tesla and Netflix.
Stocks to Watch
European car makers should generally confirm 2023 guidance during the second-quarter earnings season, though uncertainty in the form of the Chinese market looms, Bernstein said. Read more .
U.K. house builders rose to the top of the FTSE 100, as the inflation print provided a tailwind for Persimmon, Barratt Developments and Taylor Wimpey. Read more .
Orange could benefit from a more favorable competitive environment in France given that higher funding costs for its rivals suggest there are long-term drivers behind recent price increases, Citi said, raising its recommendation to buy from neutral. Read More .
U.S. Markets:
Stock futures hovered ahead of another busy day of earnings.
Investors' growing confidence that the U.S. economy can avoid a recession while the Federal Reserve raises interest rates has boosted stocks in recent days.
U.S. bond yields tracked global yields lower. The benchmark 10-year Treasury yields slipped to 3.756% Tuesday, from 3.788%.
Economic updates set for release on Wednesday include housing starts and building permits for June.
Stocks to Watch
Carvana fell 8.6% in premarket trading after it moved forward the release of its second-quarter earnings by more than two weeks. Carvana will report earnings on Wednesday.
Tesla fell 0.5% ahead of its earnings release.
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Forex:
The pound fell, hitting a seven-week low against the euro, after the U.K. inflation data.
But sterling remains high and the drop in the latest CPI figures is unlikely to be enough to deter the BOE from a second consecutive 50 basis point interest-rate rise at the August meeting, KBC said.
Argentex said sterling risks further falls as the drop in inflation prompted investors to close long positions in the currency placed in anticipation of significant further interest-rate rises.
Read the market and analyst reactions to the latest U.K. inflation data here .
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The dollar edged up slightly after recent falls but it remained weak as investors retain their overall bearish tone toward the currency, UniCredit Research said.
This is demonstrated by the fact that the DXY dollar index is "failing to hold gains much above 100" even as it recovers modestly after hitting a 15-month low of 99.5890 earlier this week, UniCredit added.
The fact that sterling remained above $1.29 even after the inflation data is "further proof of how much the ongoing dollar weakness is providing the other majors [major currencies] with a parachute," it added.
Bonds:
Eurozone government bond yields fell, extending the previous day's moves which were prompted by comments from ECB's Klaas Knot suggesting the central bank's interest-rate rise cycle could end after the July meeting.
"An interest-rate rise in July is still necessary, but a further increase thereafter is not yet set," LBBW said.
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Read Fundamentals Provide Support for Spanish Bonds Despite Election Tail Risk
Energy:
Oil prices wavered as investors balanced signs of tightening Russian supply against concerns of Chinese demand.
Ship tracking data has pointed to declining Russia oil exports, suggesting Moscow is making good on its promise to other OPEC members to slash output. But, weaker than expected Chinese data in recent days has countered that, capping oil's gains, analysts said.
Metals:
Base metals were lower as weak demand in China continued to hit prices for industrial goods.
Commonwealth Bank of Australia pointed to weak property demand with new home sales in China failing to budge in June, and one of the largest consuming areas of metals individually is the Chinese property sector.
"Confidence remains critically low...any policy support will likely need to be larger and in place for longer than in previous property downturns to be effective."
Read Gold Has High Chance of Breaching Resistance at Ichimoku Cloud's Top, Charts Show
DOW JONES NEWSPLUS
EMEA HEADLINES
ASML 2Q Net Income Slipped on Quarter; Raises Full-Year Sales Guidance
ASML Holding NV said Wednesday that second-quarter net income slipped slightly on quarter, though net sales and gross margin rose and it lifted its full-year net sales guidance.
The Dutch manufacturer of lithography systems for the semiconductor industry said net income for the period was 1.94 billion euros ($2.18 billion) compared with EUR1.96 billion in the first quarter of 2023.
Rio Tinto Sees Strong Iron-Ore Sales; Cuts Guidance for Alumina, Refined Copper
Rio Tinto PLC said it expects full-year iron-ore shipments from its Australian mining operations to be in the upper half of company guidance, but cut production estimates for several other commodities it produces, including alumina and refined copper.
The world's second-largest miner by market value on Wednesday said 2023 iron-ore shipments are now expected to be in the top half of its 320 million to 335 million metric ton projection. The company, which relies on steel ingredient iron ore for the majority of its profits, said it shipped 79.1 million tons of the commodity from its Australian iron-ore mines in the second quarter of the year, down 1% on the same time last year.
Volvo Raises Full-Year Truck Market Outlook
Volvo raised the truck market outlook Wednesday while noting that demand will begin to normalize from here.
The Swedish truck maker said truck deliveries rose 5% in the second quarter as a result of work across the value chain to handle continued supply disturbances, while order intake fell 10% as the company has continued to be restrictive in slotting orders in addition to more cautiousness among customers.
GLOBAL NEWS
Tech Stocks, Meme Stocks, Crypto: Investors Are Feeling Bold Again
For many investors, it's like 2022 never happened.
Tech stocks are rising manically, spilling into meme stocks. The cryptoverse is enjoying a resurgence. Bullishness is hitting a fever pitch in the options market. In short, risk-on investments are the most popular they have been since late 2021-right before stocks entered the longest bear market in decades.
Antitrust Enforcers Issue Blueprint for Challenging More Mergers
U.S. antitrust authorities on Wednesday issued new guidelines spelling out how they will police proposed mergers, in a move that could provide fresh legal support for the government's efforts to block deals.
The draft guidelines are part of the Justice Department and Federal Trade Commission's strategy to support more aggressive enforcement of antitrust law. They include, for the first time, explicit references to problems that can result from deals involving dominant technology companies and private-equity firms.
U.S. Rate Rises Have Hit the Yen Hard, but Now It's Staging a Comeback
Japan's currency has surged against the dollar this month. Central bank moves look set to boost it further.
The yen has been one of the worst performing major currencies in the world for much of this year, falling nearly 5% against the U.S. dollar and dropping even more against the euro, the British pound and the Swiss franc. But it has sharply reversed course in the past two weeks and has gained over 4% against the dollar since the start of July.
ADB Holds Asia Economic Growth Outlook Steady
The Asian Development Bank has kept its 2023 economic growth projection for the region steady, as consumption and investment is expected to help offset weakness in exports amid weak global demand.
The Manila-based multilateral bank on Wednesday issued its July development outlook. It continues to expect 4.8% economic growth this year for developing Asia, a region comprising 46 of its members, including China, South Korea and India. It trimmed its 2024 forecast to 4.7% from the 4.8% projected in April.
Trump Says He Received Target Letter in Jack Smith's Jan. 6 Case
WASHINGTON-Federal prosecutors told former President Donald Trump's legal team that he is a target of their investigation into efforts to undo his loss in the 2020 election, a sign that he is likely to be indicted in the case.
The notification deepens Trump's legal peril as the 2024 presidential race heats up, with Trump as the front-runner for the Republican nomination. The former president already faces a separate federal prosecution on charges that he mishandled classified documents after leaving the White House, criminal charges in New York and the prospect of an additional indictment by a local prosecutor in Georgia.
Michigan Charges 16 People With Acting as False Electors for Trump in 2020
Michigan's attorney general on Tuesday brought conspiracy and forgery charges against 16 people she said were part of a multistate effort to cast doubt about the outcome of the 2020 presidential election and keep former President Donald Trump in power.
The Michigan residents allegedly signed documents in December 2020 falsely claiming to be the rightful state electors pledged to vote for Trump. They tried to present copies of the documents to the Michigan legislature, the U.S. Congress and the National Archives, seeking to put themselves forward as an alternative pro-Trump slate of electors at a meeting of the Electoral College later that month, according to the attorney general's office.
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07-19-23 0632ET
