EMEA Morning Briefing: Shares Seen Higher Ahead of U.S. Jobs Report

MARKET WRAPS

Watch For:

Unemployment data from EU, Italy; France Industrial production index; U.K. Services PMI; trading updates from Legrand, Credit Agricole, Societe Generale, Intesa Sanpaolo, Daimler Truck, Danske Bank, InterContinental Hotels

Opening Call:

Shares were tipped to open higher in Europe on Friday. In Asia, stock benchmarks were mixed; the dollar weakened slightly; while oil and gold ticked higher.

Equities:

European stock futures were tracking higher ahead of a key U.S. jobs report due later today that will give investors their next look at how the U.S. economy is faring.

Fed Chair Jerome Powell on Wednesday cited a slowdown in hiring as among the reasons to think high-interest rates are cooling demand. Those remarks put renewed emphasis on how labor-market dynamics are playing out.

"Powell's comments indicated that their bias is still to cut," said Leah Traub, a fixed-income portfolio manager at Lord Abbett. "What was a little surprising to me is that they are now trying to shift to the labor market to support that cut."

Forex:

The Norwegian krone and Swedish krona should recover in the second half of the year after recent weakness as the dollar softens, Bank of America said.

The potential recovery will facilitate more interest-rate cuts than currently priced by the central banks of Norway and Sweden, BofA analysts said.

In the near term, however, currency weakness could prove "self-limiting" if it undermines inflation progress, the analysts said. "Against this backdrop, we see tougher choices for the Riksbank given Sweden's weaker economy and prefer NOK over SEK."

Bonds:

Treasury yields declined Thursday as markets digested the latest Fed communication ahead of April's jobs report.

Economists surveyed by The Wall Street Journal expect the jobs data, due later in the day to show the labor market cooling somewhat, with payrolls rising by 240,000, down from March's 303,000, and unemployment steady at 3.8%.

Energy:

Oil prices rebounded in Asia after an overall bearish week for the oil market.

Oil futures declined more than 5.7% in a three-day selloff, OCBC analysts said with a buildup in U.S. crude inventories, softening demand, and progress in Israel-Hamas ceasefire talks all weighing on oil prices.

The U.S. jobs report "has the potential to be a key driver for oil prices in the immediate term," ING analysts said.

Metals:

Gold edged higher early Friday. While the market holds hopes for a future rates deduction after the Fed's less-than-expected hawkish remarks, the realization that interest rates could remain higher for longer was weighing on sentiment, ANZ Research analysts said.

Investors are bracing for the U.S. April non-farm payrolls due later in the day.

Easing geopolitical risks in the Middle East was also reducing attraction for the haven asset, they added.

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Copper rose amid signs of higher demand. China's 1Q GDP print was another strong period of growth for power demand, with new power-generating capacity dominated by renewable energy, while the EV sector had a strong rebound after a weak start to the year, ANZ said.

Copper is a material component used in EVs and for renewable energy. The green economy has become China's biggest growth driver for demand for some commodities such as metals, the analysts added.

TODAY'S TOP HEADLINES

Apple Is Buffett's Best Investment. It's Also Now One of His Riskiest.

Apple is Warren Buffett's greatest investment. It has also become one of his riskiest.

In 2016, Buffett made perhaps the most surprising bet of his career. That year, Berkshire Hathaway, the company he runs, began buying up shares of Apple-the exact kind of stock Buffett and his longtime partner, Charlie Munger, had long avoided.

Private-Equity Woes Spell Opportunity for Credit-Focused Ares

Private-credit specialist Ares Management sees opportunities to help buyout shops shore up the companies they back against higher interest rates while providing cash back to their funds' investors without having to sell the underlying assets, firm leaders said Thursday.

The asset manager's financing-heavy investments jumped 52% to $18.6 billion this year through March from $12.2 billion in the year-earlier period, a presentation of the firm's first-quarter results shows. Ares deployed most of the capital through its direct-lending and alternative-credit strategies in the U.S. and Europe, the executives said.

U.K. Store Footfall Plunges as Wet Weather and Easter Absence Weigh

U.K. retail footfall declined sharply in April on unseasonably wet weather and the earlier Easter timing, pointing to continued struggles for the sector, a monthly report said Friday.

The number of visits to stores-comprising high-street, retail-park and shopping-center data-for the four weeks ended April 27 tumbled 7.2% compared with the same period a year earlier, according to the British Retail Consortium and Sensormatic Solutions IQ.

U.S. Shuffles Military Assets in Middle East After Gulf Pushback

WASHINGTON-The Pentagon is shifting jet fighters, armed drones and other aircraft to Qatar, repositioning its forces to get around restrictions on conducting airstrikes from an air base long used by the U.S. in the United Arab Emirates.

The U.A.E. informed the U.S. in February that it would no longer permit American warplanes and drones based at Al Dhafra air base in Abu Dhabi to carry out strikes in Yemen and Iraq. That has prompted U.S. commanders to send the additional aircraft to Al Udeid air base in Qatar, the small Persian Gulf monarchy that hasn't imposed similar restrictions, U.S. officials said.

Apple Sales Fall as iPhone, China Businesses Remain Sluggish

Apple's revenue declined for the fifth time in the past six quarters, dragged down by ailing iPhone sales and new competition from smartphone rivals in China.

Still, shares of Apple rose more than 7% in after-market trading as the company authorized $110 billion in stock buybacks and signaled that the current quarter is likely to see revenue growth. Also, while sales and profits fell in the March quarter, the numbers were slightly better than analyst expectations.

TikTok's Push for Users to Lobby Congress Should Be Investigated, Lawmakers Say

TikTok should be investigated for its campaign to have users lobby Washington over legislation that could kill the video-sharing app stateside, the bipartisan leaders of a China-focused congressional committee said.

TikTok's plea to users to contact their representatives, which came amid debate on legislation on the app's fate, could violate federal law against deceptive business practices and child protection law, the leaders of the House Select Committee on the Chinese Communist Party said Thursday in a letter to Federal Trade Commission head Lina Khan.

Apollo Raised $40 Billion in First Quarter, Eyes New Debt Vehicle for Individuals

Apollo Global Management's profit rose amid robust demand for its private-debt offerings, a segment in which the New York firm plans to expand its offerings.

Apollo reported inflows of $40 billion in the three months through March, with half of the money coming through its asset-management arm and half through Athene Holding, the insurance and annuity provider it owns.

Sony, Apollo Make $26 Billion All-Cash Offer for Paramount

Sony Pictures and private-equity firm Apollo Global Management have submitted an all-cash $26 billion offer for Paramount Global, the latest twist in one of the messiest deal dramas in recent memory.

Apollo and Sony on Wednesday submitted the offer letter, which was signed by Sony Pictures Chief Executive Tony Vinciquerra and Aaron Sobel, a partner at Apollo, according to people familiar with the situation. The offer is a starting point for discussions and is nonbinding.

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Expected Major Events for Friday

00:01/IRL: Apr Ireland Services PMI

06:45/FRA: Mar Industrial production index

07:00/TUR: Apr CPI

07:00/TUR: Apr PPI

08:00/ITA: Mar Unemployment

08:00/NOR: Norges Bank monetary policy decision

08:30/UK: Apr UK Official Reserves

08:30/UK: Apr S&P Global UK Services PMI

09:00/EU: Mar Unemployment

10:00/IRL: Apr Irish Live Register latest monthly figures

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May 03, 2024 00:15 ET (04:15 GMT)

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