Aurelia Butler

(Reuters) -European shares extended gains on Wednesday as a lower inflation reading from France, the euro zone’s second-biggest economy, and better-than-expected business activity data boosted sentiment.The pan-European STOXX 600 rose 0.8%, while France’s CAC 40 added 1.3%.Data on Wednesday showed euro zone business activity contracted less than initially thought, suggesting the bloc’s recession may not be as deep as feared.Further, preliminary data showed inflation in France slipped in December from a record high in the previous month, tracking a slew of encouraging data from improving euro zone manufacturing numbers to a slowdown in Germany’s inflation. “This is continuing the narrative that prices are slowing faster than expected, which is certainly welcome news for the euro zone as a whole because it eases the pressure on consumers and also companies,” said Streeter. The regional STOXX 600 ended 2022 sharply lower on fears of an economic slowdown as central banks raised rates to rein in soaring prices, driven by surging fuel costs since Russia invaded Ukraine and a reopening of the economy after the COVID-19 pandemic.Investors are now waiting for the minutes from the Fed’s December meeting for cues on the U.S. central bank’s monetary policy tightening path.The STOXX 600 index has risen 3% in the first three trading days of the new year, helped by strong economic data, easing of natural gas futures and hopes of a post-COVID recovery in China despite surging cases.China-exposed luxury companies LVMH and Richemont rose 3.3% and 1.4%, respectively, lifting the index.Economy-sensitive financials such as banks and insurers also led gains in early trading.UK’s commodity-heavy FTSE 100 lagged European peers as energy shares and miners fell 1.9% and 1.1%, respectively, tracking the weakness in crude and copper prices. Meanwhile, data showed fresh food prices at British supermarkets in early December were 15.0% higher than a year earlier, weighing on UK sentiment. Sanofi (NASDAQ:SNY) edged 0.6% up after the French healthcare company said it expected its fourth-quarter earnings, which will be published early next month, to reflect a boost from foreign exchange movements and flu vaccine sales.Switzerland-based energy company BKW AG rose 4.8% after upgrading its 2022 outlook. More

SINGAPORE/LONDON (Reuters) – European and Asian shares rose on Wednesday thanks to positive news about inflation and China’s strict anti-COVID measures, while the dollar backpedalled as investors await minutes from the Federal Reserve’s most recent meeting.The pan-European STOXX 600 was up 0.9% by 0835 GMT as a lower inflation reading from France boosted sentiment, adding to encouraging data from Germany earlier in the week. MSCI’s broadest index of Asia-Pacific shares outside Japan was 1.8% higher and set for a third straight day of gains for the year, having fallen 20% in 2022, its worst performance since 2008.The gains in both regions showed some optimism about two of the factors that made 2022 such a hellish year for investors, namely spiralling inflation and the impact on economic growth of anti-COVID restrictions in major economies such as China.But jitters in other assets showed the path ahead will be far from smooth as policymakers grapple with trying to increase rates to curb inflation without stifling the economic recovery.Minutes from the Fed’s December meeting, when it cautioned rates may need to stay higher for longer, are due to be released later on Wednesday. Investors will parse the minutes to figure out whether more policy tightening is likely.”The market has made a pretty tentative start to the year … (and) is still grappling with the notion of what we are going to see from the Fed this year,” said Rob Carnell, head of ING’s Asia-Pacific research.”There are two camps out there and they are wrestling for dominance in terms of the view. Some days higher-for-longer wins, some days (the) higher-then-lower camp wins,” Carnell said.U.S. shares, which have started the year more tentatively amid big falls in key stocks such as Tesla (NASDAQ:TSLA), looked set to open with modest gains. E-mini futures for the S&P 500 rose 0.5%.The U.S. central bank said last month when it raised interest rates by 50 basis points that the terminal rates may need to remain higher for longer to fight inflation. Markets however are pricing in rate cuts for late 2023, with fed fund futures implying a range of 4.25% to 4.5% by December.Investors will get a better picture of the U.S. labour market this week, with several pieces of data scheduled, culminating in the employment report on Friday. A weakening jobs market is seen as one of the key pieces needed to convince the Fed to begin slowing its monetary tightening path.”It is too early to start betting on a Fed pivot this year, and that should make this difficult environment for stocks,” said Edward Moya, senior market analyst at Oanda in New York.The dollar index, which measures the greenback against six other currencies, fell 0.74% after rising 1% overnight in a sign of investors’ uncertainty about the path forward for rates.The yield on 10-year Treasury notes fell to 3.6958%, and 2-year Treasury yields, which typically move in step with interest rate expectations, slipped 6 basis points. Sterling was last trading at $1.2055, up 0.74%, while the euro rose 0.6% to $1.0610, coming off a three-week low of $1.0519 touched overnight. The dollar’s weakness lifted gold, with spot prices up 1%.The Japanese yen strengthened 0.12% versus the greenback to 130.85 per dollar.Chinese stocks climbed, while Hong Kong’s Hang Seng Index jumped to its highest since July as equity investors remained optimistic about a recovery in the wake of China dismantling its stringent “zero-COVID” policy. Oil prices slid further however as concerns about weak global demand and the possibility of further U.S. interest rate increases outweighed any optimism about the benefits of China’s policy change.”Fresh warnings about the effect of aggressive rate hikes on the U.S. economy are rattling traders again, with the oil price continuing its march downwards,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.U.S. crude fell 1.62% to $75.68 per barrel, while Brent was at $80.68, down 1.73% on the day. More

Investing.com — The Federal Reserve will publish minutes of its last policy meeting in December, while we will also get the first big U.S. data releases of the year in the form of the ISM Manufacturing survey for December and the Labor Department’s Job Openings survey for November. In Washington, there’s an entirely new kind of deadlock, as MAGA and Freedom Caucus Republicans block the appointment of Kevin McCarthy as House Speaker. Chinese ADRs fly after signs that the Communist Party is easing the pressure on the sector. U.S. stocks are trying to form a bottom after Tuesday’s Tesla-inspired declines. And oil hits a two-week low amid fears for global demand. Here’s what you need to know in financial markets on Wednesday, 4th January.1. Fed Minutes to follow JOLTS and ISM numbersThe U.S. provides its first big data dump of the year, with the minutes of the last Federal Reserve policy meeting, at 14:00 ET (19:00 GMT), the climax of a day that will also include the monthly Job Openings and Labor Turnover survey and the Institute for Supply Management’s manufacturing survey.The minutes should shed light on how strongly Fed officials feel about the need to keep interest rates high if inflation – as many expect – continues its downward path this year. The JOLTS and ISM numbers – both due at 10:00 ET – should tell us a little more about how realistic it is to hope for a quick and painless process of disinflation.Weekly mortgage application and interest rate data are also due at 07:00 ET, as usual.2. Deadlock in the HouseThe U.S. House of Representatives is paralyzed, after failing to elect a speaker at the first pass for the first time in 100 years. Kevin McCarthy has now failed in three separate votes to secure majority support, thanks to a handful of right-wing holdouts in the Republican Party who consider him to be too close to the Washington, DC mainstream consensus.The 20 holdouts come largely from the staunchly conservative Freedom Caucus, which nominated Jim Jordan as Speaker, despite his insistence that he didn’t want the job.There was no sign of compromise from either part of the GOP on Tuesday, leaving few clues as to when Capitol Hill will actually be able to get on with the business of making laws.3. Stocks set to bounce a little; Tesla overshadows eventsU.S. stock markets are set to open a little higher after Tuesday’s losses, which were driven largely by fears for two of the market’s biggest heavyweights.By 06:20 ET, Dow Jones futures were up 93 points or 0.3%, while S&P 500 futures were up 0.4%, and Nasdaq 100 futures were up 0.6%. The three main cash indices lost between 0.1% and 0.8% on Tuesday.Tesla’s (NASDAQ:TSLA) 12.4% drop – a reaction to it missing the expectations for deliveries in fourth quarter – was its biggest daily fall in over two years, reflecting growing fears about demand for its cars. Apple’s (NASDAQ:AAPL) decline was more sentiment-led, driven by reports that its market cap was about to fall below the $2 trillion level. It does, however, also reflect broader fears about demand for gadgets in general after years of stimulus-fueled demand subside.Other stocks in focus later will include Tesla rival Rivian (NASDAQ:RIVN), which likewise missed its delivery targets in the fourth quarter.4. Chinese ADRs fly after regulators lighten up on Ant GroupChinese stocks extended their rally on signs that the government is following through with promises to go easier on the technology sector.The Hong Kong Hang Seng index surged to a five-month high after reports that Ant Group had received permission from the country’s securities regulators to raise capital. Regulators had notoriously blocked Ant Group’s IPO in 2020 at the start of a broad crackdown that reasserted the supremacy of politics over business in the Communist-led country.ADRs in Alibaba (NYSE:BABA), an affiliate of Ant Group which shares some of its political risks due to the fact that the same man – Jack Ma – founded both companies, rose 7.0% in premarket trading, while ADRs in Pinduoduo (NASDAQ:PDD) and JD.com (NASDAQ:JD) also rose. Tencent (HK:0700), another tech giant to face heavy regulatory pressure last year, rose 4.6% in Hong Kong.5. Oil hits two-week low on demand fears; API numbers dueCrude oil prices fell to two-week lows, as fears for the global economic outlook weighed on sentiment, adding to near-term oversupply in the U.S. caused by last week’s storms. By 06:40 ET, U.S. crude futures were down 2.6% at $74.95 a barrel, while Brent futures were down 2.6% at $80.00, having traded below that level for much of the European morning.The American Petroleum Institute will publish its weekly inventory data at 16:30 ET as usual, which is likely to show the impact of drivers being kept at home by adverse weather last week.Natural Gas prices meanwhile steadied, despite European prices hitting a new 11-month low. Demand for U.S. gas is set to stay high nonetheless, something reflected in a Reuters report overnight claiming that a Tokyo utility is in talks to buy gas producer Rockcliff Energy for $4B. More