MARKET WRAPS

Stocks:

European stocks traded higher again on Thursday after data showed a decelerating pace of German regional consumer price rises and Spanish inflation also dropping more than expected. The focus now for investors is the German state inflation data due at 1200 GMT and Friday's eurozone print.

Data showed a decelerating pace of German regional consumer price rises and Spanish inflation also dropping more than expected.

Read Consumer Inflation Expectations Remain High, Raising Chance of Further Interest-Rate Hikes

With the European Central Bank saying its future policy decisions are data-dependent, this week's inflation figures are set to be an important driver of the market's interest rate expectations, ING said.

Read ECB Expected to Deliver Two Further 25Bps Interest-Rate Rises

Stocks to Watch

Porsche is on solid ground and its future has upside, Deutsche Bank said.

Porsche's order book and longer-term ambitions are encouraging, it said, citing post-earnings meetings with the German car company's chief financial officer, Lutz Meschke.

"Porsche continues to deliver on its promised stable path, its guidance seems solid--backed by orders--, and its future planning suggests further upside potential for the company and the stock."

Deutsche Bank increased its price target for the stock to EUR120 from EUR115

---

Siemens's industrial businesses should perform well in fiscal 2Q, but the German industrial group's Healthineers business is expected to post a weak result, Deutsche Bank said.

Easing supply-chain disruptions should mean a normalization of orders at its digital-industries business but it also should contribute to an increase in the pace of new revenues.

"We see some upside to [smart infrastructure] revenue and margin objectives but this is not material enough for management to upgrade the group guidance for FY23 in our view," Deutsche said.

Deutsche Bank sees the company as well positioned to help customers decarbonize, digitize and be more energy-, resource- and labor-efficient.

---

Telefonica's expectation that earnings in its core Spanish market will stabilize at some point in the second half of the year is important for investor sentiment, Berenberg said.

The last time the Spanish telecommunications company delivered earnings growth in its home market was the fourth quarter of 2019, with recent earnings declines due to intense competition, inflationary cost pressures and a weaker sales mix, Berenberg added.

Investors will closely watch trends in the Spanish telecoms market this year in light of the planned merger between Orange's Spanish business and MasMovil, it said.

However, Telefonica offers a complicated investment case given its exposure to currency movements and interest rates, Berenberg said, cutting its target price to EUR3.70 from EUR4.70.

Economic Insight

Concerns over a potential recession have increased sharply in the U.S. and among G-7 economies since the onset of turmoil in the banking sector, according to Oxford Economics proprietary data.

The failures of Silicon Valley Bank and other banks has proved a turning point in sentiment, pulling recession concerns back in line with where they were in 2022, Oxford Economics said.

"The good news is that, so far, strong labor markets are helping to limit pass-through to broader consumer confidence, which is acting as a circuit breaker on a potentially damaging self-reinforcing cycle," it added.

"The longer the situation persists, however, the greater the risk that firms will reassess their investment and hiring needs."

U.S. Markets:

Stocks are on pace to extend their gains into a second day, bolstered by waning concerns about global banks.

"It feels a bit of a calm after the storm," Vanda Research said. "'No news is good news' is the popular phrase that everyone's using."

Additionally, the European inflation news buoyed sentiment.

Stocks to Watch

Electronic Arts said it would be cutting 6% of its staff. The company estimated it would incur charges of about $170 million to $200 million from the cost-cutting plan. The stock rose 0.4%.

Intel was up 0.3% in premarket trading. The stock closed Wednesday with a gain of 8% after it announced new data-center products and a timeline for their release. Intel has risen more than 19% this year.

Economic updates set for release include the weekly jobless-claims and the second revision of fourth quarter GDP.

Follow WSJ markets coverage here

Forex:

The euro fell after the Spanish inflation data.

The annual harmonized inflation rate fell to 3.1% in March from 6.0% in February, versus the 4.2% expected by analysts in a WSJ survey.

---

The dollar steadied after a modest recovery Wednesday when the currency saw some delayed benefit from a favorable repricing of Fed interest rate expectations, ING said.

The recent improvement in market sentiment has been accompanied by a pick-up in Fed rate expectations, which had been revised lower due to U.S. banking sector stress, but any gains for the dollar are likely to be limited, ING added.

"We think the small recovery seen yesterday could be one of many along a gradual decline path, but would favor some consolidation around current levels today."

Bonds:

Metzler said the German inflation figures are likely to show a strong impact of base effects for the first time, potentially pulling Bund yields lower.

German headline inflation is expected to fall to 7.2% in March from 8.7% in February, measured according to national standards, in The Wall Street Journal's poll of analysts.

"Data dependence is probably the order of the day...and here an extremely weak inflation figure should certainly have an effect," Metzler said.

"Then, Bund yields should also start to move down again somewhat."

Read Decline in Countries' Inflation Data Point to Lower Eurozone Bond Yields

Energy:

Oil prices ticked higher after a sharp drawdown in U.S. crude oil stocks.

The drawdown comes as data points to a sharp uptick in U.S. crude oil exports, Vortexa said.

"Inventory draws are an important bullish signal given the otherwise lackluster pricing performance of crude. Crude futures are likely to have bottomed out after strong pressure from the banking/financial markets, with quite some upside down the line."

Metals:

Base metals were mixed and gold slightly higher, with trading activity quiet ahead of Friday's U.S. inflation data.

"Weekly jobless claims will highlight that the U.S. labor market is too tight," Commonwealth Bank of Australia said, adding that combined with a high inflation reading from Friday's PCE figure, it's likely the Fed will hike rates by 25 basis points in April, thus supporting the dollar--a headwind for commodity markets.

"Unless there is broad-based contagion among U.S. banks," CBA said.

DOW JONES NEWSPLUS


EMEA HEADLINES

Deutsche Bank Selloff Focuses Attention on Credit-Default Swap Market

Last week's selloff in Deutsche Bank AG shares and bonds has drawn attention from regulators-and sparked broad debate about whether credit-default swaps caused the market stress, or simply reflected investor unease.

The instruments are derivatives that effectively insure the holder against a corporate default. The cost of insuring Deutsche Bank's debt against default in this way surged late last week, helping fuel an 8.5% decline in the bank's Frankfurt-traded stock on Friday. The episode had echoes of a social-media frenzy around Credit Suisse Group AG last fall, in which default-swap pricing also fed into a broader loss of confidence.


Siemens Energy to Refinance Siemens Gamesa Debt With $1.6 Bln Green Bond

Siemens Energy AG has placed its first so-called green bond, raising 1.5 billion euros ($1.63 billion) that will be used to refinance existing debt of its wind-turbine unit Siemens Gamesa Renewable Energy.

The German energy-technology company said late Wednesday that the bond has two tranches of EUR750 million each-one matures in three years and has a coupon of 4% and the second has a maturity of six years with an annual coupon of 4.25%.


SSE Raises FY 2023 Adjusted EPS Guidance Again

SSE PLC on Thursday raised its adjusted earnings per share expectations to more than 160 pence ($1.97) in fiscal 2023, up from the updated 150 pence guidance and backed some of the other targets it issued in January.

The FTSE 100 energy company said the performance of its flexible generation plant to support the security of supply has more than offset lower-than-planned renewables output and associated hedge buy-back costs, leading to the EPS guidance hike.


H&M Sees Cost Headwinds Improving After Posting 1Q Earnings Beat

STOCKHOLM-Sweden's Hennes & Mauritz AB on Thursday posted a better-than-expected fiscal first-quarter net profit and said its purchasing cost headwinds continue to improve.

The fashion retailer posted a net profit of 541 million Swedish kronor ($52 million) for the quarter ended Feb. 28 compared with SEK217 million a year earlier. Analysts polled by FactSet had expected a loss of SEK975 million.


Bertelsmann 2022 Net Profit Halved Despite Higher Revenue; Sees Growth Ahead

Bertelsmann SE said Thursday that net profit for last year halved despite higher revenue as one-off effects that boosted its 2021 results faded, but forecast sales growth for this year.

Net profit for 2022 was 1.05 billion euros ($1.14 billion) compared with EUR2.31 billion a year before, the German media conglomerate said. Bertelsmann said revaluations at its investment unit as well as gains on asset sales helped its 2021 result.


Petrofac, Hitachi Energy Get $14.10 Bln Agreement to Expand Offshore Wind Capacity

Petrofac Ltd. said Thursday that it and Hitachi Energy have been awarded a multiyear agreement worth around 13 billion euros ($14.10 billion) from TenneT for work to expand offshore wind capacity in the Dutch-German North Sea.

(MORE TO FOLLOW) Dow Jones Newswires

03-30-23 0618ET