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STOXX Europe 600 up 0.3%
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H&M shines after profit beat
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Sweden ups rates by 25 bps
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U.S. futures inch higher
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INTEL VS NVIDIA: MIND THE GAP (1129 GMT)
The boom of generative AI has accelerated a hunt among investors for winners and losers of this latest technological advance and in the chip space there's a gap - between Intel and Nvidia - that hardly goes unnoticed.
The widening divergence is seen across a range of metrics from share price performance, market cap and equity valuations -- Intel is trading near record lows relative to Nvidia and its market cap is now one seventh of that of its biggest rival.
Marco Simion, senior fund manager at Swiss-based Zest SA, believes Intel is set to be left behind in the AI race.
"In my view, Intel made a series of mistakes, such as abandoning the race to shrink the transistors inside their chips and, above all, they stayed stuck in the production of CPUs," he said. "This excludes them somehow. They will try to catch up but in fact they are the first big losers."
Generic CPUs (central processing units) from Intel can handle a broader range of tasks with less efficiency compared to GPUs (graphics processing units) from Nvidia. GPUs are designed to handle efficiently the type of math involved in AI computing.
For more on navigating the AI transition.
After the buzz, investors are doing their own homework on AI
Investing in AI: how to avoid the hype
(Danilo Masoni)
WHAT A PP, VOX-LED SPAIN COULD MEAN FOR EQUITIES? (1027 GMT)
Spain is heading to election in less than a month with polls flagging the lead of Spain's conservative People's Party (PP) over the left-wing ruling coalition has narrowed.
Prime Minister Pedro Sanchez on May 29 called a surprise snap election after his party and its junior coalition partner Podemos were routed in regional and municipal ballots.
According to the latest poll, a likely coalition between far-right party Vox and PP would be one seat short of the 176 outright majority on the July 23 election. Prior polls gave the two parties an outright majority.
Now, Spanish blue chips are up 15.5% so far this year, in line with pan European blue chip index.
But what would mean for the Spanish economy and markets a potential change in the government?
UBS says a new PP-Vox government would potentially extend the lifetime of nuclear power stations and cut income and corporate taxes, including special taxes on banks. Such government would also take measures to boost capex and productivity, they add.
"Tax cuts under the scenario of an incoming PP government could be supportive. Banks and utilities are two sectors we like for their earnings momentum and valuations," UBS says.
UBS top picks are banks Caixa Bank and BBVA, utilities Endesa and Iberdrola; on infrastructure, Aena, Merlin Properties and Repsol.
Indra, Talgo, Gestamp, ACS or Ferrovial are also interesting, it adds.
UK BANKS: REASONS TO BUY ON WEAKNESS (0929 GMT)
Citi has taken a fresh peek at UK banks, looking into whether further rate hikes would be bad for their earnings.
It concludes that investors should buy on weakness.
According to Citi, many are subscribing to a "simple bear argument" that anticipates rising deposit costs squeezing net interest margins (NIM) and growing asset quality risks.
Yet, the U.S. bank believes reality if far more nuanced.
On one side, Citi has cut 2023 EPS forecasts due to lower NIMs and higher loan losses. On the other hand, it sees the roll-over of structural hedges to give support in 2024 and 2025 even if the BoE starts to reverse its rate hikes.
"We understand negative sentiment into 2Q23 reporting, but with cheap valuations and high capital return yields, we would be buyers on weakness," writes Citi analyst Andrew Coombs.
Citi is generally below consensus on 2023 interest income, although it is above the street on 2024 and 2025. It has buy ratings for Natwest, Lloyds, HSBC, Barclays and Virgin Money.
STOXX FLAT (0825 GMT)
European shares are unchanged in morning trade on Thursday with the STOXX Europe 600 floating around parity, as investors seek fresh leads for direction at the end of a month that has seen the benchmark index recover part of May's losses.
The STOXX is last on the day, and up 1% month-do-date.
Moves across sectors are also muted although a profit beat from the world's second-biggest fashion retailer H&M on the back of solid summer collection helped the retail index stand out with a gain of around 1%. H&M rallied 10%.
Autos were buoyed by a 6% jump in Renault after the French car maker hiked 2023 outlook following the success of new model launches.
Here's your opening snapshot:
EUROPEAN FUTURES STEADY AFTER CENTRAL BANK CONFAB (0648 GMT)
European equity futures are broadly flat on Thursday after yesterday's central bank meet-up in Sintra, where the underlying theme was that rates in Europe and the U.S. are likely to stay higher for longer.
"Powell's comments were on the hawkish side and are consistent with another hike coming in July," says Jefferies economist Mohit Kumar.
"ECB speakers showed a divergence between hawks and doves, but the overall message leaned towards the hawkish side," Kumar adds.
Futures on the Euro STOXX 50, DAX, CAC 40 and FTSE 100 are all flat heading towards the open.
Looking forward and it's the turn of Sweden's Riksbank to announce policy at 0730 GMT, while consumer prices data from Germany and Spain will be closely watched ahead of the euro area wide inflation data on Friday.
(Samuel Indyk)
CPI TEST FOR G3 POLICY HAWKS - AND LONE DOVE (0644 GMT)
The world's biggest central banks all confirmed their policy stances from one venue on Wednesday, in the finale of the ECB's Sintra forum. Today we see how much the inflation data backs those views up.
Germany, Spain and Denmark all report June CPI figures, and the U.S. follows with the final reading of the core PCE price index for the first quarter. A little further afield, on Friday, Tokyo reports consumer price data - a leading indicator for Japan's nationwide figures due later.
ECB head Christine Lagarde cemented expectations for a July hike, and Fed chair Jay Powell perhaps upped his hawkish credentials by keeping the possibility of consecutive rate increases on the table. Bank of England boss Andrew Bailey suggested the market is underestimating how long tight policy will need to stay in place.
All the while, Bank of Japan Governor Kazuo Ueda, seated appropriately at the far end of the panel, stuck with his outlying view that inflation in his part of the world needs a bit more boosting, rather than taming.
The upshot was for the dollar to keep ticking merrily higher, venturing as far as 144.62 yen - and ever closer to the 145 line that many market players and analysts see as raising the risk of intervention.
Japanese officials were uncharacteristically quiet on the yen today, but the People's Bank of China set the record straight in dramatic fashion.
Thursday's much stronger-than-expected yuan fixing was dubbed by Citi analysts as "the most forceful sign yet of official discomfort at the pace of yuan depreciation".
China had left traders perplexed on Wednesday with an official rate in line with market projections, an about-face after two days of resolutely firmer fixings that China watchers had taken as a signal that yuan weakness would no longer be tolerated.
Circling back to Europe, Sweden's Riksbank sets policy today. The consensus among analysts is for a quarter-point hike, but markets haven't ruled out a half-point move, particularly considering the Norges Bank's hawkish surprise earlier this month.
Key developments that could influence markets on Thursday:
Riksbank rate decision
Germany, Spain, Denmark CPI
U.S. GDP, PCE final readings
U.S. weekly jobless claims
(Kevin Buckland)
