EUROPEAN MIDDAY BRIEFING - Stocks Trade Mixed -2-

10/25/2021 | 06:28am

Gold prices rose despite higher bond yields as investors worry about inflation. A gauge of inflation expectations in the U.S. rose to a nine-year high last week, noted Daniel Briesemann, an analyst at Commerzbank, while a similar measure in the Eurozone is also rising.

"The markets are pricing higher inflation in more and more...and many market participants clearly believe that the current high level of inflation is no longer merely temporary," he said.

EMEA HEADLINES

HSBC Says It Will Buy Back $2 Billion in Stock as Profit Jumps

Global banking giant HSBC Holdings PLC said it would buy back up to $2 billion in stock after its third-quarter net profit jumped, as the lender released more provisions it had previously made for bad loans.

The London-based bank, which makes most of its profit in Hong Kong and mainland China, earned $3.54 billion in the three months to the end of September, up from $1.36 billion in the same period last year.

Talks Collapse Over Sale of Troubled Italian Bank Monte dei Paschi

Monthslong talks between the Italian government and bank UniCredit SpA over the sale of nationalized lender Banca Monte dei Paschi di Siena SpA have ended, UniCredit and the government said Sunday.

The collapse of the negotiations is a blow to the government headed by former European Central Bank President Mario Draghi, which needs to reprivatize the bank by April under an agreement struck with European authorities when Rome rescued the Tuscan bank in 2017.

German Business Sentiment Declined Again in October

German business sentiment worsened again in October, as supply bottlenecks clouded the short-term outlook.

The Ifo business-climate index decreased to 97.7 points in October from 98.9 points in September, data from the Ifo Institute showed Monday. This is the fourth consecutive decrease of the indicator after it peaked at 101.8 in June.

Volvo Cars Prices IPO at Bottom of Range Ahead of Stockholm Listing

Volvo Cars, the Swedish auto maker owned by China's Zhejiang Geely Holding, on Monday priced its initial public offering at the bottom of the indicative range and reduced the size of its share offering ahead of its Stockholm listing.

Volvo said it has set the price of its initial public offering shares at 53 kronor ($6.18) each, having previously indicated a price range of between SEK53 and SEK68 each.

Supply-Chain Disruptions Encourage Rio Tinto to Mine Its Own Sludge for Critical Minerals

Snarled supply chains are giving new impetus to Rio Tinto PLC's efforts to produce minerals essential for modern technologies, starting with mining sludge from a giant copper pit in Western U.S.

Waste produced at Rio Tinto's Kennecott mine near Salt Lake City, Utah, contains a clutch of critical minerals that have long been overlooked by global miners in favor of copper and commodities that can be produced at scale and sold into markets with a deep pool of investors. Now, these lesser-known minerals are becoming more valuable as the U.S. and its allies worry about security of supply amid geopolitical tensions and disruptions in exporting countries due to the pandemic and a power crunch.

Sibanye-Stillwater Nears $1 Billion Deal to Acquire Brazil Nickel and Copper Projects

Sibanye-Stillwater Ltd. is in advanced talks to buy two Brazilian mining companies for about $1 billion including debt, a bet on continued demand for metals used in the production of electric-car batteries.

The South Africa-based miner confirmed the talks Monday, without disclosing the valuation under discussion, after The Wall Street Journal reported they were taking place.

Co-Operative Bank Approaches Banco De Sabadell to Buy TSB Bank

The Co-operative Bank PLC said Monday that it has sent a letter to Banco de Sabadell SA over the potential acquisition of Sabadell's U.K. subsidiary TSB Banking Group.

The U.K. lender, which was responding to weekend press reports, said that no talks are currently taking place between the two companies.

SSAB 3Q Net Profit Beat, Cautions on Auto Demand Amid Semiconductor Shortage

Swedish steelmaker SSAB AB on Monday posted a bigger-than-expected rise in third-quarter net profit, driven by high steel prices.

The company said third-quarter net profit rose to 4.48 billion Swedish kronor ($522.2 million) from a loss of SEK741 million a year earlier, as sales rose 74% to SEK25.22 billion.

SolarWinds Hackers Continue to Hit Technology Companies, Says Microsoft

The Russia-linked hackers behind last year's compromise of a wide swath of the U.S. government and scores of private companies, including SolarWinds Corp., have stepped up their attacks in recent months, breaking into technology companies in an effort to steal sensitive information, cybersecurity experts said.

Turkey's Erdogan Threatens to Expel 10 Western Ambassadors, Including U.S. Envoy

Turkey's President Recep Tayyip Erdogan threatened to expel the U.S. ambassador and the top envoys of nine other Western countries who called for the release of a jailed philanthropist, in a move that could further strain ties between the two NATO allies.

"These 10 ambassadors must be declared personae non gratae at once," Mr. Erdogan said at a rally on Saturday in the western Turkish city of Eskisehir. "I gave the necessary order to our foreign minister and said what must be done."

Sudanese Prime Minister Detained in Apparent Military Coup

Sudan's prime minister was detained following an apparent military coup of the transitional government that has been ruling the country since the ouster of longtime dictator Omar al-Bashir, the country's information ministry and several government officials said Monday.

Tensions between civilian officials and the generals who have been ruling Sudan under an uneasy power-sharing deal have been escalating for several weeks amid a spiraling economic crisis in the strategic nation on the Horn of Africa.

The U.K. Ditched Coal and Left Itself With a New Set of Challenges

BLYTH, England-Coal from mines around this northeastern English port town made the U.K. an industrial and imperial superpower in the 19th century. In the 21st, the country has all but ditched the fuel.

By kicking its coal habit, the U.K. has charted a route for the U.S. and other nations seeking to reduce carbon emissions. British governments made it prohibitively expensive to burn coal while prodding investors to plow tens of billions of dollars into renewables, energy executives and financiers say.

Endemic Covid-19 Has Arrived in Portugal. This Is What It Looks Like.

LISBON-In this soccer-crazed capital of a soccer-obsessed nation, the stadiums are full again. Portugal, a country ravaged earlier in the year by the Delta variant of the coronavirus, now has the highest Covid-19 vaccination rate in Europe and offers a glimpse of a country trying to come to grips with what is increasingly looking like an endemic virus.

Tens of thousands of screaming soccer fans crammed into the Estadio da Luz here Wednesday to watch hometown favorites Benfica take on Bayern Munich. They amassed on the subway to the stadium, at the entrance as officials patted them down and, after the game, at food trucks where they downed sandwiches and beer as they tried to forget the drubbing their team had just received.

GLOBAL NEWS

Fed Prepares to Taper Stimulus Amid More Doubts on Inflation

Federal Reserve officials are set to wind down their $120 billion-a-month bond-purchase program in November, but questions over how soon inflation pressures will fade are creating more uneasiness inside the central bank.

Fed Chairman Jerome Powell and senior officials have played down worries this year that a surge in prices during the uneven pandemic recovery would lead to permanently higher inflation. The most notable price increases have been tied to items most affected by the shutdown and reopening of the economy, but there are signs that inflation is coming from a broader set of products and services.

Energy-Stock Surge Leaves Climate-Focused Investors Behind

A surge in energy stocks is challenging climate-conscious money managers who beat the market for years when the sector struggled but are now missing out on Wall Street's hottest trade.

The S&P 500 energy sector has rebounded 54% this year, outpacing the broad index's 21% climb and leading the second-best performing group by about 16 percentage points. That would mark the third-largest such gap between the top two sectors since 2000, according to Dow Jones Market Data.

Economy Week Ahead: Central Banks, GDP, Consumer Spending

Gross domestic product data from the U.S. and eurozone this week will show how sharply economic growth slowed in the third quarter.

Powell Says Supply-Side Constraints Have Worsened, Creating More Inflation Risk

Federal Reserve Chairman Jerome Powell indicated he is now somewhat more concerned about higher inflation and said that the central bank would watch carefully for signs that households and businesses were expecting sustained price pressures to continue.

"Supply-side constraints have gotten worse," Mr. Powell said Friday at a virtual conference. "The risks are clearly now to longer and more-persistent bottlenecks, and thus to higher inflation."

Xi's 'Common Prosperity' in Theory and Practice

Investors had, over the past 30 years, grown so accustomed to ignoring rhetoric about communism from nominally-communist China that a leader firmly putting equality at the heart of his economic agenda has caused more than a little heartburn. The Oct. 15 release of a fuller transcript of President Xi Jinping's mid-August remarks on "common prosperity" therefore piqued considerable interest.

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10-25-21 0628ET

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