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MARKET WRAPS

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UK CBI distributive trades survey; Italy business confidence survey, consumer confidence survey; trading updates from SAP, LVMH, Salvatore Ferragamo, Diageo, STMicroelectronics, Nokia, SEB, Volvo, Telia

Opening Call:

European shares look poised to rise on Thursday ahead of U.S. GDP data later in the day. Asian stock benchmarks mostly rose; Treasury yields fell; the dollar slipped slightly; while oil futures were mixed and gold edged higher.

Equities:

Stock futures point to gains at Thursday's open in Europe as the corporate earnings season continues. A batch of U.S. economic data are on the docket today, including fourth-quarter GDP.

Wall Street indexes ended mixed Wednesday, as investors weighed fourth-quarter corporate earnings reports from technology behemoths and awaited next week's Federal Reserve interest-rate decision.

"There's been a little bit of a bias toward risk-off sentiment over the last 24 hours, thanks partly to some weaker-than-expected earnings releases that added to growing concerns about a potential U.S. recession, " said Jim Reid, a Deutsche Bank strategist.

The next few weeks of quarterly results are expected to heavily influence the direction of the U.S. stock market, which has kicked off 2023 with strong gains.

"Earnings are the first big test for markets this year," said Emmanuel Cau, head of European equity strategy at Barclays, who noted that investors are particularly focused on guidance for the year ahead.

"The tone of the reporting is on the cautious side," he said. While growth is slowing, the market is likely to care about the outlook more than fourth-quarter results, he said.

Read: U.S. economy ended 2022 on solid footing, GDP to show. But a recession might loom.

Forex:

The U.S. dollar wavered in Asia. The greenback mostly continues to trade on the back foot amid sideways U.S. interest rates and positive sentiment toward equities, said Alvin T. Tan, head of Asia forex strategy at RBC Capital Markets.

Bonds:

Treasury yields mostly fell early Thursday, after benchmark 10-year Treasury yields edged lower Wednesday for a second straight day as worries about a slowing U.S. economy dented appetite for risk and boosted demand for government bonds.

A cautious tone across markets encouraged investors to buy government bonds on Wednesday, nudging yields lower.

Many forecasters have been sounding alarms about the risk of the U.S. economy slipping into a recession in 2023, after the Fed dramatically raised interest rates last year. U.S. central bankers also continue to stress the need to keep rates high for some time to win the inflation fight.

With the next Fed decision on rates due next week, focus remains on Thursday's release of fourth-quarter GDP.

Energy:

Crude oil futures were mixed in Asia, as traders continue to wait for confirmation that China's economy could return to a prepandemic trend, said SPI Asset Management.

Traders are also likely watching for the impact of the European Union cutting off Russian diesel imports, which could coincide with higher demand in China and lead to a tighter supply situation for crude, SPI added.

"Simmering recession worries and fading hopes of a soft landing will remain headwinds for the market. However, ongoing optimism for sharply rising demand out of China will continue to support prices in the near term," Sevens Report Research said. As we move into the back half of the week, $78.50 to $79 a barrel in WTI will be a "key near-term support level to watch."

Metals:

Gold strengthened slightly early Thursday. Gold prices could range between $1,935/oz-$1,960/oz until the coming Fed decision, as traders watch for any reaction to fears of a slowdown in macroeconomic growth, said Oanda.

Any sign of slowdown in the central bank's rate increases could help to chart a clearer path for gold, Oanda added.

Gold "remains supported on the view that the days of [interest] rate hikes are numbered, but given the impressive gains over [the] past two and a half months, some would argue that much of the positive news is now priced in," said Fawad Razaqzada, market analyst at City Index and Forex.com.

"Gold's great run was sparked by a change in sentiment in how quickly the Federal Reserve will pause its interest rate hikes and further fueled by the collapse of crypto exchange FTX, and then further supported by a weakening of the U.S. dollar," said Rupert Rowling, market analyst at Kinesis Money.

"With these three factors now priced in, gold will need a fresh catalyst to push it higher than the elevated level it is already trading at," he said.

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Copper edged higher in Asia. The industrial metal has continued to trade around its highest levels in more than seven months amid supply risks in South America and continued optimism that China's reopening will support demand, ING said.

TODAY'S TOP HEADLINES

U.S. Warns Banks to Watch for Russian Oligarchs Investing in Commercial Real Estate

Banks should be on alert for Russian oligarchs attempting to circumvent U.S. sanctions by investing in commercial real estate, a U.S. Treasury Department watchdog said.

Wealthy Russians with ties to the Kremlin are likely attempting to evade the economic sanctions placed on them in the U.S. by moving money into the commercial-real-estate sector, where complex financing methods and opaque ownership structures can help bad actors hide funds, the Treasury's Financial Crimes Enforcement Network, better known as FinCEN, said Wednesday.

SEC Floats Ban on Wall Street Activities Linked to 2008 Financial Crisis

WASHINGTON-Regulators proposed banning a Wall Street practice that lawmakers said was partly to blame for the 2008 financial meltdown.

The Securities and Exchange Commission voted 5-0 Wednesday to re-propose a long-delayed rule that would prohibit conflicts of interest by entities that create asset-backed securities, such as mortgage bonds. The proposal will now be open for public comment until the commission considers whether to finalize the rule.

U.K. Gambling Company Fined $7.6 Million Over Alleged Money-Laundering Control Issues

U.K. online gambling company Intouch Games Ltd. has been fined the equivalent of $7.6 million after a regulator cited a series of failures in its program to prevent money laundering.

The U.K.'s Gambling Commission on Wednesday announced the GBP6.1 million penalty for Intouch, the third action the regulator has taken against the company since 2019.

Germany Sees Its Economy Growing This Year Despite the Ukraine War

FRANKFURT-The German economy will grow this year and might even avoid a shallow recession in the short term, the government said on Wednesday, the latest sign of brightening growth prospects in Europe despite the shock of Russia's invasion of Ukraine.

Europe's largest economy is likely to expand by 0.2% this year, the German Economy Ministry said Wednesday in its annual economic report, revising up an autumn forecast for a 0.4% contraction.

U.S., Germany Approve Sending Tanks to Ukraine

The U.S. and Germany outlined plans Wednesday to send dozens of modern battle tanks to Ukraine, marking a significant new infusion in Western assistance for Kyiv while raising challenges about how to get enough of the potent weaponry to the battlefield in time as Ukraine and Russia prepare new offensives.

The White House said that it would send 31 M1 Abrams tanks to Ukraine, enough for a Ukrainian tank battalion, while Germany said it would provide 14 Leopard 2 main battle tanks and allow other European nations to provide dozens more of the German-made tanks.

IBM to Cut 3,900 Jobs Amid Broader Tech Slowdown

International Business Machines Corp. on Wednesday joined the wave of companies making layoffs, saying it would cut about 3,900 jobs.

The cuts will stem from Kyndryl Holdings Inc., the IT services business that IBM spun off last year, and its healthcare divestiture, from which the company will incur about a $300 million charge, a spokesman confirmed.

Meta Pays BuzzFeed Millions to Generate Creator Content for Facebook and Instagram

Facebook parent Meta Platforms Inc. is paying BuzzFeed Inc. millions of dollars as part of an effort to bring more creators to the social-media giant's platforms, according to people familiar with the situation.

The partnership comes as both companies are embracing the creator economy, in which individuals build large social-media audiences by posting videos and other content, and often make money on advertising or brand sponsorships.

Why Tesla Is Still Gunning for Growth

While tech companies are cutting jobs, Tesla is unapologetically still gunning for growth. This might be the only route it can take.

The electric-vehicle maker said late Wednesday that it expects to make 1.8 million vehicles this year, up about 31% on last year's output. That is well below its longer-term ambition of expanding by 50% a year, perhaps reflecting a bout of caution after the company spent last year fruitlessly chasing the target. But Chief Executive Officer Elon Musk still made it clear that he is committed to expanding as fast as supply chains allow.

Elon Musk Explores Raising Up to $3 Billion to Help Pay Off Twitter Debt

Elon Musk's team has held talks with investors about raising up to $3 billion to repay some of the $13 billion in debt tacked onto Twitter Inc. as part of his buyout of the company, people familiar with the matter said.

In December, Mr. Musk's representatives discussed selling up to $3 billion in new Twitter shares, people familiar with the matter said.

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FROM FINANCIAL NEWS

Wall Street banks have axed bonuses for top dealmakers, with thousands of disgruntled bankers scrambling for new jobs as layoffs pick up pace across the sector.

After bumper payouts for 2021, banks have taken a brutal approach to bonuses for top investment bankers as dealmaking has slumped, according to people familiar with the matter....>> READ MORE

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Expected Major Events for Thursday

00:01/UK: Dec UK monthly automotive manufacturing figures

07:00/DEN: Dec Retail Sales Index

07:00/SWE: Dec Foreign trade

07:00/NOR: Nov Labour force survey SA, incl unemployment

07:00/NOR: 4Q Labour force survey

08:00/SPN: 4Q Economically Active Population Survey

08:00/SWE: Jan Quarterly Business Tendency Survey

08:00/SWE: Jan Consumer Tendency Survey

09:00/ITA: Jan Business Confidence Survey

09:00/ITA: Jan Consumer Confidence Survey

11:00/UK: Jan CBI Distributive Trades Survey

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(END) Dow Jones Newswires

January 26, 2023 00:17 ET (05:17 GMT)

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