MARKET WRAPS

Stocks:

European shares were back in the red on Thursday as investors continued to fret about more U.S. interest rate rises, with upcoming jobs data adding to the market's caution.

"In the space of a month, we've gone from a narrative that had [Fed] rate cuts coming before the end of the year, to an imminent pause in the next couple of months, to how many more rate hikes can we now expect?" CMC Markets UK said,

"Tomorrow's payrolls report could well go further in reinforcing the latter if the jobs growth we saw in January isn't revised significantly lower and February also sees a strong print."

Stocks to Watch

Adidas looks upbeat about bouncing back to sales growth and higher margins, Jefferies said following a post-results call with management at the sportswear firm.

Adidas confirmed that 2023 will be a year of transition, with a likely sales decline and operating loss, but new CEO Bjorn Gulden was upbeat about a return to double-digit operating margins--from just 3% in 2022--as well as double-digit revenue growth.

This implies substantial share gains, notably in wholesale amid a focus shift, Jefferies said.

Adidas should book a flat top line this year, excluding a potential Yeezy write-off, before reaching 10% growth next year, while the margin should recover to 4% next year and 9% in 2025, according to Jefferies's forecasts.

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Bayer is expected to have a moderate 2023, if all goes well, after reporting strong growth in 2022, Baader Europe said, raising its rating on the stock to buy from add.

The company is warranting some optimism on 2023, especially on the crop-science business, according to Baader Europe. The division will broadly defend its profitability as the part of the business which isn't related to glyphosate will generate stronger-than-initially-expected sales.

That will offset the anticipated fall in glyphosate-related products and margins, Baader Europe said.

Economic Insight

Bond market observers are struggling to explain why the U.S. and eurozone economies are so robust, despite central banks having already raised key interest rates significantly, DZ Bank said.

While there are multiple possible explanations, none of them are entirely convincing, it added.

"It can be argued for instance that monetary policy measures take effect with a considerable time lag or that governments have pursued an [overly] expansionary fiscal policy both now and in the past."

The argument that real yields are too low for a sufficiently tight monetary environment isn't really cogent either, DZ Bank said, expecting central banks will remain under pressure to continue to raise interest rates.

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Improving business and consumer sentiment in Germany suggest that economic growth could pick up in the second half, but any noticeable acceleration in growth looks unlikely, Commerzbank said.

The decline in energy prices is good news for the growth outlook, but its effects on the economy are likely to be limited because the government absorbed a large part of the higher energy bills last year, it said.

Moreover, the effect of the interest-rate increases on the German economy will intensify this year, neutralizing the positive tailwind from lower energy prices, Commerzbank said.

U.S. Markets:

Stock futures edged down as investors awaited new data that could give some indication of the strength of the labor market-a key factor in how much further the Federal Reserve may raise interest rates.

The Labor Department is slated to report the number of worker filings for unemployment benefits in the week ended March 4 at 1330 GMT. It comes ahead of the monthly nonfarm payrolls report Friday.

Stocks to Watch

General Electric will be hosting an analyst and investor event on Thursday at its aerospace headquarters in Cincinnati. Two areas of interest for investors: the continuing global aerospace recovery, and the company's power-generation business.

Earnings reports are expected before stock markets open from JD.com, BJ's Wholesale Club and FuelCell Energy. Oracle, DocuSign, Ulta Beauty and HashiCorp will report after Wall Street closes.

Follow WSJ markets coverage here .

Forex:

The DXY dollar index remains well above 105 and close to a 14-week high after Jerome Powell signaled more rate increases to come, but it has stabilized for now as market players await Friday's key U.S. monthly jobs data, UniCredit Research said.

EUR/USD is also "showing quite impressive resilience above 1.05," especially considering Wednesday's strong ADP private U.S. employment data.

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Sterling is at risk of falling as the Fed and European Central Bank show more resolve to raise interest rates than the Bank of England, ING said.

GBP/USD dropped after Jerome Powell signalled higher rates than previously anticipated on Tuesday and it could depreciate further to 1.1650, ING added.

"We continue to favor EUR/GBP trading up to and staying near 0.90 over coming months given the risk of the BOE shifting to a pause far earlier than the Fed or the ECB."

Bonds:

Morgan Stanley sees the 10-year Bund yield capped near term, with the ECB set to raise interest rates by 50 basis points next week and is likely to signal another 50bp rise in May.

"We think that following the ECB's March meeting we could see a continuation of the consolidation dynamics on duration, with 10-year yields capped in the near term at the 2.75% level and possibly testing 2.50%," Morgan Stanley said.

It expects the ECB's terminal rate at 4% [versus 2.5% currently], with a 50bp increase in May to be followed by two 25bp hikes in June and July, before the ECB pauses in September.

Citi said various technical indicators now point to a waning downside momentum for German Bunds, signaling the selloff might have lost momentum. However, a buy signal is missing in the technical picture, Citi added.

Read ECB Might Raise Interest Rates Less Than Markets Expect

Energy:

Crude futures inched higher after Wednesday's EIA data showed an unexpected drawdown in U.S. oil stocks. Still, prices remain sharply lower for the week so far following hawkish comments Jerome Powell.

Metals:

Base metal were lower, with gold flat, as expectations continue to gather pace for further Fed rate hikes.

Markets are now looking to Friday's jobs report and next Tuesday's inflation data, Deutsche Bank said.

However, in the meantime "markets continued to price in a growing chance that the Fed would go for a 50 basis point move at the next meeting," providing further hawkish sentiment to risk assets.

Read Platinum Is the New Precious Metal Darling. Why Palladium Lost Its Shine.

DOW JONES NEWSPLUS


EMEA HEADLINES

Credit Suisse to Delay Publication of 2022 Annual Report After Call From SEC - Update

Credit Suisse Group AG said Thursday that it will delay the publication of its 2022 report after a call from U.S. market regulators over revisions to 2019 and 2020 cash-flow statements, adding a further reputational headache as the lender attempts to woo back clients in its latest restructuring effort to return to profitability.

The Swiss bank said it received a late call from the U.S. Securities and Exchange Commission on Wednesday in relation to certain open SEC comments about the technical assessment of previously disclosed revisions to its consolidated cash-flow statements in the 2020 and 2019 fiscal years as well as related controls.


JCDecaux Shares Slump on Lack of Dividend, Weak Guidance

Shares of JCDecaux SE plunged in Thursday morning trading after the French outdoor-advertising company set weaker-than-expected guidance for the first quarter and said it wouldn't pay a dividend despite swinging to a net profit last year.

At 0815 GMT, JCDecaux shares traded 7.9% lower at EUR20.98.


Dassault Aviation Shares Surge After Profit, Dividend Boost

Shares of Dassault Aviation SA jumped in Thursday morning trading after the French aircraft manufacturer posted a higher net profit for 2022 and raised its dividend despite expecting lower sales this year as supply snags persist.

At 0830 GMT, Dassault Aviation shares traded 9.4% higher at EUR174.70.


Hugo Boss Sticks to Brand Strategy as It Aims to Grow Top, Bottom Lines in 2023

Hugo Boss AG said Thursday that it will maintain its focus on developing its brands to support revenue and earnings growth in the year ahead, and will substantially raise its dividend for 2022 after exceeding its targets.

The German premium-fashion firm said it expects sales growth in the mid-single digits of percent in 2023, along with 5%-12% growth in its operating and net profit. Sales growth should be highest, reaching the teens, in Asia-Pacific, Hugo Boss said.


Deutsche Post Expects Lower 2023 Earnings Amid Economic Uncertainty

DHL owner Deutsche Post AG said Thursday that it expects lower earnings for 2023, citing an uncertain economic outlook, but increased its share-buyback program by 1 billion euros ($1.05 billion).

The German logistics giant said it expects earnings before interest and taxes for 2023 to be between EUR6 billion and EUR7 billion, and that it targets EBIT of more than EUR8 billion in 2025. Deutsche Post's EBIT for 2022 as a whole was EUR8.44 billion, up 5.7% on year.


Hannover Re Raises Dividend After Life Business Delivers Profit Growth in 2022

Hannover Rueck SE said Thursday that it would propose a raised dividend after double-digit increases in earnings and premiums in 2022.

The German reinsurer declared a dividend of 6 euros ($6.33) a share including a special dividend, comprising a EUR5 ordinary dividend and a special dividend of EUR1, compared with EUR4.50 and EUR1.25, respectively-and EUR5.75 in total-in 2021.


Standard Bank Group 2022 Boosted by Higher Interest Rates

Standard Bank Group Ltd. on Thursday reported a 39% rise in net profit for last year on higher revenues that were boosted by higher interest rates and said that it is ahead of plan and confident to deliver on its 2025 targets.

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03-09-23 0552ET