Bloomberg Daybreak: Europe 04/17/2024

Summary

The stock market takes a breather following a rise in treasury yields. Federal Reserve Chair, Jerome Powell, suggests rates can remain steady, reversing previous comments. Morgan Stanley plans significant job cuts in China, and corporate earnings focus shifts to Europe with LVMH reporting slowing sales and ASML revealing a drop in first-quarter bookings. The UK Chancellor hints at potential rate cuts and an autumn election, while the US prepares new sanctions on Iran's missile and drone program.

Takeaways

• 📉 The stock market selloff pauses after a rise in treasury yields, indicating a fluctuating economic climate.
• 🔄 Fed Chair Jerome Powell suggests rates can remain steady, reversing previous comments about potential rate increases.
• 💹 Morgan Stanley plans significant job cuts in China, reflecting adjustments in response to the economic slowdown in the region.
• 📊 ASML, the chip equipment supplier, reports first-quarter bookings significantly below estimates, missing the target at €3.61 billion versus the expected €4.63 billion.
• 🔽 LVMH reveals a slowdown in sales, particularly noting a drop in demand from China and the US, impacting the luxury goods market.
• 🏦 Atos CEO expresses confidence in the company's future despite struggling shares and significant debt, indicating potential solutions are in progress.
• 🌐 UK Chancellor Jeremy Hunt hints at the possibility of interest rate cuts later in the year, which could positively affect voter sentiment.
• 📉 The UK is expected to have lower inflation than the US and Eurozone, which could influence the timing of the next general election.
• 🚀 Bitcoin halving event, which occurs every four years, is approaching with mixed predictions on its impact on cryptocurrency prices.
• 📈 Despite a slower growth forecast, the IMF predicts the UK will outpace several G7 nations in long-term growth prospects.
• 🤝 JP Morgan CEO Jamie Dimon discusses the potential of technology and fintech to disrupt traditional banking, highlighting the need for adaptation and competition.

Q & A

What is the current status of the stock selloff mentioned in the transcript?

The stock selloff has taken a breather after another jump in treasury yields.

What did Fed chair Jerome Powell say about interest rates in his recent statement?

Fed chair Jerome Powell reversed course, stating that interest rates can be kept steady as long as needed.

What is Morgan Stanley planning in terms of its workforce in China?

Morgan Stanley is set to plan its biggest round of job cuts in China in years.

How did LVMH's first quarter sales growth compare to previous years?

LVMH reported its weakest first quarter sales growth since 2016, excluding the pandemic.

What was the reported issue with ASML's first quarter bookings?

ASML reported first quarter bookings that came in significantly below the estimates at €3.61 billion, versus the expected €4.63 billion.

What is the current forecast for ASML's second quarter gross margin?

The forecast from ASML is that they'll get 50 to 51% in terms of the gross margin for the second quarter.

What was the reaction of the markets following Powell's comments on interest rates?

The markets saw higher bond yields and some weakness in equities, but the reaction was not too profound considering the change in Powell's tone.

What is the current situation in the Asian markets according to the transcript?

Asia stocks are catching a bit of a breather, with the currency being a focus due to the past week's devaluation. There is a rebound in the Chinese currency, and the Korean won and Japanese yen are recovering some lost ground.

What is the significance of the new sanctions imposed by the US on Iran?

The new sanctions target Iran's missile and drone program in response to Tehran's attack on Israel. The sanctions are symbolic and serve as a diplomatic signal of support for Israel.

What is the expectation for UK inflation data released at 7 a.m. UK time?

The expectation is that the UK inflation data for March will show a moderation from 3.4% to 3.1%.

What is the current state of Brent and WTI oil prices as investors await potential response from Israel?

Brent is at $89.45, down 6/10 of a percent so far in the session, and WTI is down 7/10 of a percent.