EU monetary developments in the euro area; France consumer
confidence survey, housing starts; Italy industrial turnover; UK
capital issuance statistics; trading updates from Remy Cointreau,
Shares in Europe may rise at the open on Friday after U.S. data
and tech gains boosted sentiment ahead of a slew of central bank
decisions next week. In Asia, stock benchmarks advanced; Treasury
yields largely rose; the dollar was steady; oil futures
strengthened; while gold fell.
European shares look set to rise at Friday's open, after U.S.
indexes closed higher overnight, helped by a tech rally.
"Thursday's GDP report suggests that the [U.S.] economy is
relatively strong even in the face of aggressive measures by the
Federal Reserve to calm inflation," said Carol Schleif, chief
investment officer at BMO Family Office.
Markets cheered the latest data as evidence that the U.S.
economy might achieve a soft landing, rather than slumping into a
recession. Hopes also have been building that lower inflation
readings could result in less aggressive interest-rate hikes by the
But some strategists also worry economic data might not yet show
the full effects of the restrictive policy.
"The economy continues to act like a forward moving ocean liner,
but I do see the GDP report as kind of looking in the rearview
mirror. The Fed hikes started about a year ago. They [rate hikes]
take a year to 18 months to really take effect, so I think by the
middle of the year we will see a market slowdown, and I would
suspect a good chance of negative GDP by mid-year," said Chris
Grisanti, chief equity strategist at MAI Capital Management.
While investors heralded it as the latest sign that the U.S.
economy is holding up well despite the Fed's aggressive
interest-rate hikes, Grisanti suspects the economic slowdown will
happen faster than investors are pricing in.
"The current situation is like a horror movie with two monsters.
Monster No. 1 is the Federal Reserve's rate hikes," Grisanti said.
"The second monster is the economic slowdown," he said. "We think
the economy will slow relatively quickly as winter moves into
Next week, the Fed is expected to continue moderating its rate
increases to a quarter-percentage point, down from a
half-percentage point at the previous meeting, after a key metric
showed inflation slowed for the sixth straight month in December.
On Friday, the Fed's preferred inflation gauge is set to be
Read: The US Economy Isn't as Strong as It Looks. Get Ready for
Another Stock Market Tumble.
The dollar wavered early Friday in Asia. Among the factors
weighing on the dollar lately are U.S. CPI showing inflation
pressures easing, lower U.S. government-bond yields compared with
other developed markets, news of China's reopening and positive
economic surprises out of Europe, Capital Economics said.
"That said, we think the weakness in the dollar associated with
both the Fed 'pivot' and brighter economic prospects has largely
run its course. Even if much of the economic weakness in the next
quarter or two is concentrated in the US, our view is that 'risky'
assets in the US and elsewhere have yet to fully discount a
downturn in the US and that a renewed tightening of financial
conditions will push up the dollar."
Treasury yields were mostly higher early Friday, after edging
higher overnight as a positive tone in equity markets curtailed
demand for fixed income products.
Yields initially added to their rise after U.S. GDP data topped
expectations, though economists cautioned the backward-looking data
could mark a last gasp of solid growth. The economy is widely
expected to slow sharply in 2023, with some economists arguing a
recession may have already begun. Yields trimmed their rise later
in the session.
"The most current fundamental update on Thursday came in the
form of initial jobless claims, which declined to just 186k for the
week of Jan. 22 -- too late in the month to be influential for
[nonfarm payrolls] estimates for next week," said BMO Capital
"Nonetheless, the outright level of claims is consistent with
the ongoing strength in the labor market that continues to provide
the FOMC with not only cover to tighten further but increasingly
with justification in light of the Committee's objective of seeing
a higher unemployment rate before flying the mission accomplished
banner on re-establishing price stability."
Crude oil futures rose in Asia, buoyed by signs of rising demand
from China, ANZ said.
Traders are likely focusing on the outcome of the OPEC+ review
meeting taking place next week, where delegates are expecting an
advisory committee of ministers to recommend keeping crude-oil
production unchanged, ANZ added.
Gold fell slightly early Friday. Oanda senior market analyst
Edward Moya said the precious metal softened a bit as
stronger-than-expected U.S. GDP figures lent support to the view
that the Fed might be able to deliver a soft landing, but he
reckons that safe-haven demand will continue as consumer spending
is clearly weakening.
"We will probably need to wait a little longer for GDP and
claims data to catch up." Focus will be on the Fed's rate decision
next week, which typically influences the price of the metal.
Copper strengthened on continued optimism over Chinese demand
spurred by the country's reopening.
The copper market is now pricing a booming China and a soft U.S.
and Europe, said Citi.
Around $6.7 billion of funds have flowed into LME/Comex copper
in the year-to-date, Citi estimated, adding that there has been a
huge 750,000 tons of net buying over the past three weeks.
TODAY'S TOP HEADLINES
Gas prices jump to $3.50 a gallon in January, pose threat to
Fed's inflation fight
U.S. gasoline prices have shot up an unusually strong 9.2% in
January to average about $3.50 a gallon as of Thursday, which could
throw a wrench in the Federal Reserve's inflation fight, according
to Bespoke Investment Group.
Prices at the pump fell sharply in the second half of 2022 to a
low of $3.096 a gallon on Dec. 22, giving back all six months of
earlier gains, plus some (see chart), according to Bespoke, when
looking at the AAA reading of national average gas prices.
Airbus to Hire 13,000 Workers as Delivery Delays Rise
Airbus SE is recruiting over 13,000 new staffers this year-after
hiring the same number in 2022-to help it accelerate production of
its commercial jets, recover from escalating delivery delays and
meet surging demand for new aircraft from its customers.
The Toulouse, France-based plane maker, which currently employs
more than 130,000 people across its commercial jet, space, defense
and helicopter businesses, said 9,000 of the new jobs would be
based in Europe with the remainder spread across operations in
places such as the U.S. and China.
U.S., Israel Send Message to Iran With Biggest-Ever Military
ABOARD THE USS GEORGE H.W. BUSH-Thousands of American and
Israeli military personnel joined forces this week for an
unprecedented exercise intended to send a message to adversaries
like Iran that the U.S. isn't turning its back on the Middle East,
even as it focuses on the war in Ukraine.
After four days of military exercises stretching from the
Mediterranean Sea up into space, the U.S. and Israel fired more
than 180,000 pounds of live munitions in the largest joint exercise
ever carried out by the two allies. U.S. jet fighters roared off
this ship, which served as a key hub for the military exercise off
the Israeli coast, as top generals from both countries gathered on
board to take stock of the week's operations.
Renault, Nissan Near Deal on Alliance Shake-Up
Renault SA and Nissan Motor Co. Ltd. are nearing a deal to
reshape their 20-year-old alliance, according to people familiar
with the matter, in a restructuring that would reduce the French
car maker's shareholding in its Japanese partner and give both
companies more autonomy.
A deal could be officially unveiled early next month, these
people said, and would represent the most significant change in the
car makers' alliance since it was forged amid a financial crisis at
LVMH Posts Record Earnings on Surge in Demand for Luxury
PARIS-LVMH Moët Hennessy Louis Vuitton SE reported record annual
revenue and profit, as it rides a surge in demand for luxury goods
that China's recently loosened Covid-19 restrictions could extend
into this year.
Postpandemic demand for LVMH's dozens of brands, including fine
wine, jewelry and fashion labels and upscale hotels, has cemented
the group's position as the most valuable listed company in Europe.
It has also helped its chief executive officer and controlling
shareholder, Bernard Arnault, overtake Elon Musk as the world's
Intel Slumps on Disappointing Earnings Amid PC Weakness
Intel Corp. reported a fourth-quarter loss, hurt by a souring
market for its chips and growing competition from rivals, as it
also issued a gloomy outlook for the current quarter.
Semiconductor companies have seen a stark shift to a glut of
chips amid recession fears from a period of shortage during the
height of the pandemic driven by demand for all-things digital.
Intel also has been battling loss of market share to rivals such as
Advanced Micro Devices Inc. and companies that have embraced
semiconductors based on technology from British chip-design
specialist Arm Ltd.
Elliott Prepares to Nominate Slate of Directors at
Activist investor Elliott Management Corp. is preparing to
nominate a slate of directors at Salesforce Inc., according to
people familiar with the matter, in a sign that a battle may be
looming for board seats at the business-software maker.
Elliott is having conversations with numerous technology
executives as well as those with other industry backgrounds, the
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Expected Major Events for Friday
00:01/UK: 4Q BRC-LDC Vacancy Monitor
06:00/FIN: Dec Labour force survey, incl unemployment
07:00/SWE: Dec Labour Force Survey
07:00/SWE: Dec Retail sales
07:00/NOR: Dec Retail Sales
07:30/HUN: Dec Employment & unemployment
07:45/FRA: Jan Consumer confidence survey
07:45/FRA: Dec Housing starts
08:00/SVK: Dec PPI
08:00/SPN: 4Q Preliminary GDP
09:00/ITA: Nov Industrial turnover
09:00/AUT: Jan Austria Manufacturing PMI
09:00/EU: Dec Monetary developments in the euro area (M3)
09:30/UK: Dec Capital issuance statistics
10:00/MLT: Nov Registered Unemployed
10:00/MLT: Dec Registered Unemployed
11:00/IRL: Dec Retail Sales Index
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(END) Dow Jones Newswires
January 27, 2023 00:25 ET (05:25 GMT)
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