European Midday Briefing: China Reopening Uncertainty Adds to Worries
European stocks continued to struggle on Thursday, as worries over rising interest rates and economic growth prospects continued to drag on investor sentiment.
Traders were also assessing how the lifting of China's Covid restrictions will ripple through global economies and markets, while looking ahead to the various headwinds likely next year.
"With 2022's dismal stock and bond performance expected to carry into 2023, along with ongoing inflationary concerns, uncertain Fed policy, and lingering geopolitical tensions, investors won't be receiving any holiday gifts this year for their portfolios," AXS Investments said.
Stocks to Watch
Sanofi had strong operating momentum in the first nine months of 2022, solid expected prospects for best-selling drug Dupixent and vaccines, and continued margin improvement, Baader Europe Research said.
The pharma major is expected to show some material upside after its share price recovered in recent months and litigation over recalled drug Zantac provided relief.
The company's robust balance sheet is also helping make up for recent R&D setbacks, according to Baader Europe.
Stock futures ticked higher while bond yields fell as China's reopening has left some investors nervous.
Economic data due for release today includes the weekly initial jobless claims report, published at 1330 GMT.
The dollar was slightly lower, driven down largely by losses against the yen after the recent surprise decision by the Bank of Japan to tweak its policy on yield-curve control.
Oil prices were around 1.5% lower, as investors see out 2022 considering the unknowns from China's Covid-19 reopening.
Beijing's recent moves to ease its lockdown measures promise to lift Chinese demand for crude but could also see cases rise in the country.
"The reversal of zero Covid policy is merely tempering a broader recessionary tail risk for oil prices and not an immediate demand boost, " SPI Asset Management said.
Read Barrons.com A New Age Dawns for Oil Markets
Base metals were little changed, on course to end the year with losses, with prices undone by recession fears and a global tightening of monetary policy.
Read Barrons.com Copper Is Sliding. Where Inflation Could Send Prices Next Year.
DOW JONES NEWSPLUS
Europe Taps Tech's Power-Hungry Data Centers to Heat Homes
With an energy crisis hitting Europe, governments are exploring ways to recycle electricity used on social-media scrolling, conference calls and video streaming to help heat homes and offices.
Electricity-hungry data centers are seeing huge growth in usage, leading to pressure from European officials to funnel the excess heat generated by their computer chips into municipal heating networks.
Exxon Sues EU Over Windfall Profit Levy
BRUSSELS-Exxon Mobil Corp. said Wednesday that it has filed a lawsuit against European Union authorities over the bloc's decision to impose a windfall levy on energy companies' high profits triggered by Russia's invasion of Ukraine.
The EU approved a plan this past fall to redistribute some energy company profits and revenue in a bid to shield consumers from high energy prices. The plan sought to cap producers' revenue from electricity generated by fuels other than natural gas and demanded that oil-and-gas companies hand over one third or more of money the EU considers to be excess profit.
Turkey, Syria Defense Ministers Meet in Moscow
ISTANBUL-Turkey's defense minister and intelligence chief held talks with their Syrian counterparts in Moscow on Wednesday, the first formal, high-level meeting between the two Middle East governments since the eruption of a civil war in Syria in 2011.
The meeting, attended by senior Russian officials, came as Ankara is beginning to open a dialogue with Damascus after more than a decade of hostility. Turkish President Recep Tayyip Erdogan was the chief foreign supporter of an armed rebellion that sought to topple Syrian President Bashar al-Assad amid the uprisings of the Arab Spring.
Suspected Russian Agent in Germany Had Access to Western Intelligence About Ukraine War
BERLIN-A senior German intelligence officer arrested on suspicion of spying for Russia had access to a trove of top-secret information about the war in Ukraine as well as knowledge of how it was collected by the U.S. and its allies, Western officials say.
Prosecutors are trying to determine whether the material was shared with Moscow. If so, it could have alerted Russia to its own vulnerabilities and given away Western intelligence-gathering methods and capabilities.
Some Billion-Dollar Startups Risk Losing 'Unicorn' Status
Startups with billion-dollar valuations had plenty of cash on hand to ride out a sharp pullback in venture investing over the past year. Doing so in 2023 will be more challenging.
Known as unicorns, startups valued at $1 billion or more tend to be later-stage ventures, often poised for a public-market debut. Now with their cash reserves running low and the market for initial public offerings largely frozen, many are facing tough choices in the months ahead-not least, how to raise new capital in a down market without selling high-priced shares at a discount, analysts said.
Copper Is Sliding. Where Inflation Could Send Prices Next Year.
Copper prices will probably tumble nearly 20% over the next 12 months as demand cools and supplies stay stable amid a likely economic slowdown, experts say.
"I wouldn't be surprised to see prices edge lower," says Carlos Sanchez, director of commodities management at New York-based CPM Group.
Talking Markets: China's Real-Estate Recovery May Take Longer to Emerge
China's embattled property market is seeing some green shoots of recovery, but the sector may have to wait longer for a revival in investor confidence.
Beijing's abrupt ending of its zero-Covid policy and promise of support to the sector is likely to ease property developers' financial woes and, in turn, help revive home buyers' confidence.
Chinese 'Revenge Travel' Will Lift Tourism in 2023
After nearly three years, China is finally going to reopen its borders. That also means the return of Chinese tourists, who will provide a boost to businesses-especially in neighboring countries-that used to rely on them.
Visitors to China will no longer need to undergo quarantine or do Covid-19 tests on arrival beginning in early January 2023, ending some of the country's remaining major restrictions after an abrupt U-turn on its pandemic policies in December. That will allow businessmen and tourists to return to China, which has been largely closed to the outside world since 2020. It will also make it easier for previously globe-trotting Chinese to finally venture out.
Jan. 6 Panel Withdraws Subpoena Issued to Trump
WASHINGTON-The House select committee investigating the Jan. 6, 2021, Capitol riot withdrew a subpoena it issued in October to Donald Trump as the investigation has wrapped up and Republicans are set to take control of the chamber in January.
"As you may know, the Select Committee has concluded its hearings, released its final report and will very soon reach its end," Chairman Bennie Thompson (D., Miss.) wrote in a letter to the former president's lawyer on Wednesday. "In light of the imminent end of our investigation, the Select Committee can no longer pursue the specific information covered by the subpoena," Mr. Thompson added.
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This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
December 29, 2022 06:00 ET (11:00 GMT)Copyright (c) 2022 Dow Jones & Company, Inc.