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STOXX 600 up 0.6%
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Richemont hits record high, lifts luxury
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Debt ceiling deadline in focus
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BRITAIN'S RETAILERS ATTEMPTING TO SING IN THE RAIN (0931 GMT) Things might just be starting to look up for Britain's retail sector. The Bank of England on Thursday made its biggest improvement to its growth projections since it first published forecasts in 1997, while interest rates look close to their peak. Separately, wholesale energy prices continue to retreat while mortgage rates are also off their highs seen in the wake of former Prime Minister Liz Truss's mini-budget.
But Jefferies equity analysts note there is still caution for the sector.
"The sector's c.10% de-rating from the mid-March highs reminds us of investor circumspection," Jefferies says in a note.
"Upcoming May updates ... are unlikely to swing the debate decisively as a cautious tone will persist (with the atrocious weather of recent weeks an added factor)." Kingfisher, Marks & Spencer and B&M are all scheduled to report later this month and Jefferies are expecting mixed results.
"We expect KGF to report pressured sales with their Q1 trading update ... as poor weather (particularly in the UK), strike impacts in France and a mixed macro in Poland all weigh," they say.
On M&S, Jefferies expects final results to deliver a "resilient" send half of the year, but assumes a "suitably circumspect (and qualitatively articulated) guidance for 23/24 given macro unknowns and gross margin challenges." For B&M, Jefferies does not expect "great surprises" from the quarter and maintains its cautious view on shares.
(Samuel Indyk)
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LUXURY GIVES EUROPE SOME SPARKLE (0750 GMT) European shares are trading higher on Friday, boosted by a jump in luxury stocks after upbeat earnings from Richemont.
Shares in the owner of luxury brands including Cartier and Mont Blanc are up 5.5% to a record high after sales jumped over 19% due to strong demand from Chinese consumers.
The STOXX Luxury Index is up 2%, helping the broader STOXX 600 to a 0.4% gain in early trade, but still broadly flat for the week.
Autos and parts are a weak spot, mostly due to a 7.8% decline in BMW shares <BMWG.DE?, which are trading ex-dividend. Here's your opening snapshot:
(Samuel Indyk)
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FUTURES SIGNAL POSITIVE OPEN (0636 GMT) European and U.S. equity futures are in the green ahead of the European open on Friday, with investors keeping a close eye U.S. debt ceiling negotiations before the federal government runs out of money to pay its obligations, possibly as soon as June 1.
Euro STOXX 50 futures are up 0.4%, while futures on the DAX , CAC 40 and FTSE 100 are rising between 0.3%-0.4%. Wall Street futures are up around 0.2%. A meeting on raising the U.S. debt limit between top lawmakers including President Joe Biden that had been scheduled for later today was postponed, which some analysts were viewing with optimism.
"This is seen as an indication that some progress has been made in the negotiations, but one should be cautious about hoping for a quick solution," says SEB analyst Lara Mohtadi.
"There is still a significant risk that an agreement will be delayed until the last minute, making it a nail-biter for the markets in the upcoming weeks." On the corporate front, Allianz reported a big rise in quarterly profit, although still fell just short of analyst expectations.
France's third-biggest lender Societe Generale reported better-than-forecast quarterly earnings, boosted by a windfall from its trading division.
(Samuel Indyk)
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MARKETS GET TWITCHY AS DEBT CEILING, GROWTH FEARS WEIGH (0555 GMT)
Signs of an economic slowdown across the globe, lingering worries over the U.S. debt ceiling and ever-present fear of a deepening banking sector crisis have kept investors skittish and risk averse through the week and Friday has been no different. The MSCI Asia ex-Japan index eased 0.5%, with Japan's Nikkei indeed the exception, as it has been for the year, rising 0.8% on the day. The U.S. dollar was clinging to Thursday gains and was set to snap a two-week losing streak. Gold remained steady while short-covering pushed oil prices higher. Investor focus will turn to a slew of economic data out of Europe, with British gross domestic product data showcasing the state of economy and likely influencing sterling's fate. The pound was still reeling from a dive on Thursday after the Bank of England raised interest rates and kept the door open for further monetary tightening. Also on the deck will be inflation reports from France and Spain that will highlight what kind of impact European tightening has had on prices in the region. Data in U.S. hours showed the labour market might be showing signs of cracks, whereas inflation eased a bit, leading traders to bet that the Federal Reserve is likely done with tightening.
Meanwhile, worries over national debt remain, with Treasury Secretary Janet Yellen due to discuss the impasse over raising the government debt ceiling with board members of the Bank Policy Institute lobby group next week. A meeting between President Joe Biden and top lawmakers scheduled for Friday has been postponed, stoking further investor concern. The federal government could run out of money to pay its bills as soon as June 1 - in two and a half weeks - if the ceiling is not raised. Elsewhere, the U.S. regional banking saga shows no sign of stopping, with PacWest Bancorp the latest to face investor ire after the Los Angeles-based lender said deposits declined and that it had posted more collateral to the Fed to boost liquidity. "The news headlines increased our customers' fears of the safety of their deposits," the bank said. Finally, it looks like Twitter will soon have a new CEO. Elon Musk said (on Twitter, naturally) he has found a new chief executive for the social media site, but did not name the person, while the Wall Street Journal reported that Comcast NBCUniversal executive Linda Yaccarino was in talks for the job.
Key developments that could influence markets on Friday:
Economic events: UK first-quarter GDP data, industrial output, inflation data for France and
Spain
Speakers: Bank of England's Huw Pill, Riksbank's Deputy Governor Per Jansson
(Ankur Banerjee)
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