EUROPEAN MIDDAY BRIEFING - Stocks Tumble, Led by -2-

01/21/2022 | 06:52am

"As the winter continues, strong demand across the energy complex will add to bullish sentiment. There is a very real possibility that colder-than-usual weather due to La Niña weather patterns will drive demand higher, pushing the market into a deficit sooner, rather than later."

A shortage of nickel worsened in November, according to data from the International Nickel Study Group. The global nickel market had a 3,000-metric-ton deficit in November, 1,400 tons larger than in the previous month, the INSG said.

In the 11 months through November, the shortage of nickel totaled 167,000 tons, compared with a surplus of 92,500 tons in the same period during 2020. Nickel prices have soared this month as stocks have dwindled.

Reports that Indonesia, a major producer, is considering a tax on nickel exports have put additional upward pressure on prices. Three-month nickel on the LME fell 0.7% to $23,680 a ton, but remains more than 14% higher for the month.

Gold edged lower in early European trade on position adjustment ahead of the weekend. The focus of gold traders is shifting to next week's FOMC meeting, with Russia-Ukraine tensions probably factored into the prices of precious metals, Phillip Futures said.

Rising U.S. interest rates remain a potential headwind since this translates into a higher opportunity cost of holding non-yielding bullion, the brokerage added.

Copper prices have seen choppy trading this week with demand concerns presenting headwinds while falling inventories have offered support. That range-bound trading is likely to continue with prices averaging $9,690 a metric ton this year, said analysts at BNP Paribas.

Weakness in China's construction sector is likely to drag on copper demand in the first half of the year while rising mine supply should also add to headwinds, the bank said.

Three-month copper on the LME was down 0.8%, joining a rout in global markets that comes as investors slash their exposure risk assets on fears of slowing economic growth. For the week, the metal is on course to end with a modest 2.2% gain.


EMEA HEADLINES

Investors See New Sparkle in Europe's Tech Scene

Europe's tech scene has struggled to emerge from the shadows of giants in the U.S. and Asia, but friendly local policies and a global overflow of investment capital are now giving the region a gusher of cash.

Investments in European tech firms soared to $93.3 billion last year, a record and a 142% increase over the year before, according to CB Insights. The number of deals jumped as well, to 7,051 from 5,746 the year before and 6,051 the year before that.


France's Total Exits Myanmar, Citing Shareholder Pressure Since Coup

SINGAPORE-France's TotalEnergies SE said it is withdrawing from Myanmar over shareholder pressure and a deteriorating human-rights situation since the country's military seized power in a coup last year.

Western energy companies have faced growing calls to divest or withhold revenue from the junta, while governments including the U.S. and France have come under pressure to sanction the sector. Myanmar's oil-and-gas industry is the country's single largest source of foreign revenue.


Eurozone Inflation Seen Falling in 2022, But More Slowly Than Expected

Eurozone inflation climbed to a record-high level of 5.0% in December but should start decelerating from January. However, more persistent supply-side price pressures observed in energy, food and non-energy goods suggest a very gradual inflation moderation in 2022, Barclays says.

For Barclays, the eurozone inflation outlook remains uncertain with risks skewed to the upside. The surge in wholesale energy prices has so far mainly boosted inflation in counties with a relatively high share of variable-rate utility tariffs in the overall consumer bill, such as Spain and Belgium. This leaves countries with a larger share of regulated and fixed-rate utility tariffs--including Germany, France and Italy--exposed to delayed, and potentially sharp, consumer price hikes.


Siemens Gamesa Issues FY2022 Pft Warning After Swinging to 1Q Loss Amid Supply Bottlenecks

Siemens Gamesa Renewable Energy SA lowered its guidance for the fiscal year late Thursday after it swung to an operating loss in the first quarter on continued supply-chain constraints.

In the three months to Dec. 30, the Spanish energy company posted an adjusted loss before interest and taxes of 309 million euros ($350 million) from a profit of EUR121 million a year earlier, on revenue that fell to EUR1.8 billion from EUR2.3 billion, according to preliminary figures.


Siemens Energy Lowers FY2022 Targets on Gamesa Profit Warning

Siemens Energy AG late Thursday lowered its targets for fiscal 2022 after swinging to an operating loss in the first quarter, and following a profit warning from its Spanish renewables subsidiary.

According to preliminary results, Siemens Energy made an adjusted loss before interest, taxes and amortization of 57 million euros ($64.5 million) in the October-December period, compared with adjusted Ebita of EUR243 million in the same quarter the previous year. According to a company-compiled consensus, it had been expected to make a profit of EUR91 million.


U.K. Retail Sales Slumped in December as Omicron Cases Raged

U.K. retail sales sank in December, sharply missing analysts' forecasts, as the nation witnessed surging Covid-19 cases and tightened social-distancing guidance.

Retail sales volumes dropped 3.7% from a month earlier, the Office for National Statistics said Friday. Economists polled by The Wall Street Journal had forecast a more modest decline of 0.6%.


Rio Tinto Reviewing Serbia's Move to Revoke Lithium Project Licenses

Rio Tinto PLC said Thursday it was reviewing the legal basis and implications of a decision by Serbia's government to revoke licenses for the mining company's lithium project.

"Rio Tinto is extremely concerned by the statement from the prime minister, Ana Brnabic, about cancelling the spatial plan and revoking licences related to the Jadar project," a company spokesman said.


Palfinger Issues 1Q, 1H Profit Warning on Rising Costs, Supply Chain Woes

Palfinger AG late Thursday issued a profit warning for its first quarter and first half of 2022 citing "massive" cost increases and supply-chain issues.

The Austria-based crane producer said it expects its earnings before interest and taxes in the January-March and January-June periods to come in far below levels from the previous year.


Airbus Cancels Qatar Airways Order for 50 A321 Planes

Airbus SE has canceled a plane order from state-owned carrier Qatar as the two companies have been in dispute for months over surface degradation on A350 jets.

The European plane maker has canceled a contract for 50 of its A321 planes, a company spokeswoman told Dow Jones Newswires on Friday, confirming an earlier report by Bloomberg.


Investor AB Raises Dividend After Investments Generated 4Q Shareholder Return of 21%

Investor AB on Friday proposed a dividend increase after the value of its investments rose sharply during the fourth quarter, generating total shareholder return of 21% compared with 2% for the same period the previous year.

Total shareholder return for the year rose to 55% from 19%.


How a Small Town Learned to Stop Worrying and Love Amazon

DARLINGTON, England-Many traders in this old market town hold Amazon.com Inc. partially to blame for the closures of a raft of local shops in recent years.

Then, Amazon opened a warehouse here.


U.K. Consumer Confidence Drops to a Near Year-Low on Inflation, Omicron Worries

British consumers turned more pessimistic in January as the spread of the Covid-19 Omicron variant and high inflation weighed on households' outlook of the economy and spending plans, according to a survey by the research firm GfK.

GfK's consumer-confidence barometer fell to minus 19 in January from minus 15 December, the lowest level since February 2021. Economists polled by The Wall Street Journal expected the confidence index to retreat slightly to minus 16.


GLOBAL NEWS

China's Yield Advantage Over U.S. Bonds Narrows

The extra yield that Chinese government bonds offer over U.S. Treasurys this week dropped below a percentage point for the first time in nearly three years, as the central banks of the world's two largest economies move in opposite directions.

The narrowing gap, reflecting both a rally in Chinese bonds and a U.S. selloff, reduces one longstanding argument in favor of foreign investors buying more Chinese debt. But analysts and investors say the long-term torrent of international money pouring into Chinese fixed-income markets is likely to continue.


Swoon in Tech Stocks Puts Startup Valuations in Harsh New Light

Waning enthusiasm for tech stocks in the public markets is casting doubt on valuations in the private market, where prices last year hit stratospheric levels.

The public arenas have begun to dial down their fervor for high-growth tech stocks, with investors in particular punishing companies that don't make money-startups in tech and biotech, blank-check companies and others still finding their feet.


Investors See New Sparkle in Europe's Tech Scene

Europe's tech scene has struggled to emerge from the shadows of giants in the U.S. and Asia, but friendly local policies and a global overflow of investment capital are now giving the region a gusher of cash.

Investments in European tech firms soared to $93.3 billion last year, a record and a 142% increase over the year before, according to CB Insights. The number of deals jumped as well, to 7,051 from 5,746 the year before and 6,051 the year before that.


China's Transport Ministry Summons Freight-Delivery Platforms, Warns Ride-Hailing Firms

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