MARKET WRAPS
Stocks:
European stocks made muted moves on Tuesday, with investors focused on key central bank rate decisions due this week and as some more big U.S. names are scheduled to report earnings later in the session.
U.S. Markets: Markets:
Stock futures suggested a slightly higher start for markets with Wall Street preparing for the start of the two-day Federal Reserve meeting and earnings reports from some of the biggest U.S. corporations.
Technology stocks are poised to open higher ahead of a busy day of earnings, including results from Microsoft and Alphabet.
U.S. bond yields ticked up. The yield on the benchmark 10-year Treasury note rose to 3.890%, from 3.855% Monday.
Data Watch
Data on the U.S. housing market is due before markets open, followed by the Conference Board’s consumer-confidence reading.
Stocks to Watch
F5 reported above-forecast fiscal third-quarter earnings. Shares rose 10% in premarket trading.
Cadence Design Systems raised its forecast for the year, but the stock fell 4.5%.
Logitech rose 5.2% after beating fiscal first-quarter earnings estimates and hiking its guidance.
NXP Semiconductors beat analysts’ second-quarter earnings and revenue expectations. The stock rose 2.3% in premarket trading.
Walmart was upgraded to Overweight from Neutral at Piper Sandler with a price target of $210. Its shares rose 1.3% in premarket trading.
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Forex:
The euro extended its falls, dropping to its weakest in nearly two weeks against the dollar, after a below-forecast German Ifo business climate survey added to evidence of a sluggish economy.
“The bigger-than-expected fall in the German Ifo, together with the drop in the PMIs published yesterday, suggest that the German economy continued to shrink at the start of 3Q,” Capital Economics said.
Read German Business Sentiment Fell in July for Third Consecutive Month
The dollar edged lower, dented by risk appetite among investors after promises from China’s Politburo of ‘counter-cyclical’ measures, ING said.
However, risk appetite is tentative, particularly ahead of Wednesday’s Federal Reserve rate decision, it said.
“The European economy looks weak and tomorrow’s [FOMC] meeting will probably see the Fed’s foot remaining firmly on the monetary brakes.”
ING expects the DXY dollar index to trade in a tight range between 101.00-101.50 ahead of the Fed meeting.
Read Rates Markets Expected to Remain Volatile, TwentyFour Asset Management Says
Bonds:
Protracted coalition negotiations and possibly another election in the fourth quarter might still weigh on Spanish government bonds, but economic strength is likely to counter political uncertainty, Citi said.
“We expect Spain to remain one of the fastest growing among major EA [euro area] economies in coming years with a prudent fiscal policy, regardless of the government,” Citi said. It stays bullish on Spanish bonds on a fundamental basis in the medium-term.
Citi continues to expect Spanish bonds to converge with French peers, while in the near-term it hopes for better entry levels to go long.
Read Faster ECB Balance Sheet Reduction Seen as Alternative to Rate Rise in September, J. Safra Sarasin Says
Energy:
Oil futures were little changed after China signaled it was considering support for the flagging property sector but stopped short of announcing the broader economic support investors were hoping for.
Metals:
Base metals gained on China’s planned new policies to support property developers.
China’s home building is a major source of metals demand and the signals are lifting metals prices after a period of concern about the Chinese economy, ANZ said.
“The market will require more details on these latest measures before it will feel assured the worst is behind it.”
DOW JONES NEWSPLUS
EMEA HEADLINES
Dove Maker Unilever Still Raising Prices as Volumes Slip
Unilever, the maker of Hellmann’s mayonnaise and Dove soap, beat second-quarter sales growth expectations, pushing through still-sharp price increases despite a slight decline in volumes.
The consumer goods giant-which also makes Ben & Jerry’s ice cream-said underlying sales grew 7.9% for the second quarter of the year, compared with the same period last year. That came thanks to an 8.2% rise in prices. Volumes fell 0.3%.
Remy Cointreau Shares Climb After Backing FY 2024 Outlook
Shares in Remy Cointreau rose Tuesday after the company reiterated its fiscal 2024 outlook and its expectations of a recovery in the second half following a drop in sales for the first quarter.
At 0818 GMT, shares in the French drinks group were up 3.3% at EUR150.35, having risen more than 7% earlier.
Alstom 1Q Sales Rose, Orders Declined Against Tough Comparative
Alstom said Tuesday that first-quarter sales grew while orders fell against a strong prior-year comparative.
The French trainmaker said it achieved sales of 4.175 billion euros ($4.62 billion) in the three months ended in June, a 4.3% rise over the prior year.
Shell to Sell 35% Interest in Indonesia’s Masela Block for Up to $650 Million
Shell said Tuesday that it is selling its 35% interest in Indonesia’s Masela production sharing contract, which includes the Abadi gas project, to PT Pertamina Hulu Energi and Petronas Masela for up to $650 million in cash.
The oil major said it would receive an initial $325 million in cash, with an extra $325 million when the final investment decision on the Abadi gas project has been taken.
Akzo Nobel 2Q Net Income Rose but Missed Market Consensus; Raises 2023 Guidance
Akzo Nobel on Tuesday reported an 11% rise in second-quarter net profit-missing market forecasts-and raised its full-year guidance based on current market conditions.
The Dutch paints company-which houses the Dulux, Polycell and Cuprinol brands-made a net income for the quarter of 118 million euros ($130.6 million) compared with EUR106 million for the comparable quarter a year earlier and a consensus of EUR194 million, taken from the company’s website.
Dassault Systemes Backs 2023 View After 2Q Revenue Rose
Dassault Systemes on Tuesday confirmed its guidance for the year after revenue in the second quarter rose.
Reporting on a non-IFRS basis, the French software maker said total revenue rose to 1.45 billion euros ($1.60 billion) from EUR1.38 billion in last year’s second quarter.
Sasol FY 2023 Chemical Sales Fell on Lower Prices; Met Views
Sasol said Tuesday that its chemical sales fell in fiscal 2023 due to lower prices, and that it expects continued pricing and demand volatility in fiscal 2024.
The South African energy and chemicals group said chemicals sales revenue fell to $8.99 billion in the fiscal year ended June 30, from $10.55 billion in fiscal 2022, on lower prices offsetting slightly higher sales volumes.
Adidas 2Q Revenue Fell, to Book Smaller Operating Loss
Adidas AG said Monday that sales fell in the second quarter and that it expects a smaller operating loss this year.
Bayer Group Lowers 2023 Outlook on Declining Sales of Herbicides
Bayer Group lowered its 2023 outlook due to a further decline in sales of glyphosate-based products, or herbicides.
The German pharmaceutical-and-agricultural company on Monday said it now expects adjusted sales for the full year to range between 48.5 billion euros and 49.5 billion euros (between $53.96 billion and $55.07 billion). It previously forecast between 51 billion euros and 52 billion euros.
Prospect of Interest-Rate Rises Ending is Good News For Bonds, Aegon AM Says – Interview
Bond investors have good reason for optimism in the coming months as central banks look likely to finish raising interest rates soon, Nick Chatters, fixed-income manager at Aegon Asset Management, told Dow Jones Newswires.
This should spur demand for bonds, pushing yields lower, he said in an interview.
UBS to Pay Nearly $400 Million in Fines to Settle Credit Suisse’s Archegos Failures
UBS agreed to pay U.S. and U.K. regulators around $390 million in fines related to the investment firm Archegos Capital Management, whose collapse hammered Credit Suisse, a rival it acquired earlier this year.
Credit Suisse engaged in “unsafe and unsound counterparty credit risk management practices” related to its dealings with Archegos, the Federal Reserve said.
GLOBAL NEWS
Stock Market Shrugs Off Recession Signals as Rally Builds
Stocks have floated higher as Wall Street dials back its recession forecasts. Some investors aren’t ready to call the all-clear.
They point to worrying economic signals, lofty equity valuations and the possibility that the Federal Reserve continues raising interest rates or keeps them elevated longer than the market anticipates. The S&P 500, meanwhile, has advanced 19% this year even as analysts expect 2023 corporate earnings to barely inch up.
Chinese Developers Jump After Beijing Signals Support for Property Sector
Shares of Chinese developers jumped early Tuesday after China’s top leadership pledged more policy support and adjustments to property policy, hinting at easing measures targeted at the struggling property sector.
Property developers’ shares advanced in both the Hong Kong and mainland markets. The Hang Seng Mainland Properties Index rose 10%, outperforming the benchmark Hang Seng Index, which was up 2.8%.
Ukraine’s Stalled Offensive Puts Biden in Uneasy Political Position
The slow pace of Ukraine’s counteroffensive against entrenched Russian invaders is dimming hopes that negotiations for an end to the fighting could come this year and raising the specter of an open-ended conflict, according to Western officials.
(MORE TO FOLLOW) Dow Jones Newswires
July 25, 2023 05:35 ET (09:35 GMT)
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