European equities closed higher for the second consecutive session on Thursday, with the Eurozone’s Stoxx 50 rising 0.7% to 4,989. Positive sentiment was fuelled by growing expectations of Federal Reserve rate cuts. ECB minutes revealed concerns about low growth and persistent inflation, adding uncertainty to their policy outlook. Banks like BNP Paribas and Santander led gains, each rising 2%, while energy giants TotalEnergies and ENI also advanced. The US equities market was closed for the Independence Day holiday.

Summary for 05.07.2024

Asian shares were mixed on Friday. Chinese shares slid amid rising Taiwan tensions, with the Shanghai Composite and CSI 300 down 1%. South Korea's KOSPI rose nearly 1%, driven by Samsung's strong Q2 profit forecast. Japan's Nikkei and TOPIX steadied near record highs due to a weaker yen and BOJ policy expectations.

European markets look poised to extend gains as US equity futures held steady with investors awaiting the monthly jobs report which is expected to show a cooling labour market that would support Fed rate cuts.

Oil prices were steady this morning in Asian trade but are set for a fourth consecutive weekly gain, driven by strong summer demand expectations and supply concerns. Brent crude slipped to $87.41 a barrel, while WTI edged up to $83.97. A significant drop in US inventories and reduced Russian exports also supported prices.

Keir Starmer's Labour Party secured a significant parliamentary majority in the UK general election, surpassing 326 seats early Friday. This outcome marks a pivotal shift in British politics, with Labour projected to win 410 seats, the highest since Tony Blair's 1997 victory. Equity-index futures rose and the pound held gains, reflecting investor optimism for stability under Starmer's centre-left platform.

ECB minutes from June showed concerns over the Euro Area's recovery hinging on uncertain private consumption data. Policymakers expressed doubts about inflation reaching the 2% target by 2025 amid increased economic uncertainty. Despite a 25bps rate cut and a data-driven approach, they emphasised no pre-commitment to future rate paths, aiming for sustainable inflation.

The European Union will impose tariffs up to 37.6% on Chinese electric vehicle imports starting Friday, aiming to counter alleged state-subsidized price advantages. This move, part of a contentious trade dispute, may lead to higher EV prices in Europe and potential retaliatory measures from China.

Samsung Electronics reported a significant surge in second-quarter operating profit, reaching approximately 10.4 trillion won ($7.50 billion), compared to 670 billion won a year ago, exceeding Reuters' estimated 8.8 trillion won. Sales rose to 74 trillion won from 60.01 trillion won last year, driven by strong demand for memory chips and AI-integrated devices, including flagship smartphones.

SoftBank is exploring strategies to secure a substantial volume of Nvidia GPUs for AI development, potentially through a special-purpose entity financed by up to $10 billion in borrowed funds. This move aims to bolster SoftBank's AI infrastructure, emphasizing Arm's pivotal role in AI chip design.

Shares in medical devices manufacturer Smith & Nephew jumped almost 7% on Thursday after activist investor Cevian Capital disclosed a stake in the group. Cevian has taken a 5% interest in Smith & Nephew, aiming to create long-term value by improving its operational performance. The company has faced challenges, including changes in Chinese procurement practices and executive turnover, impacting investor sentiment.

Shares in Continental surged over 9% yesterday after the German tire maker's pre-close call in the prior session indicated progress in its automotive unit for the second quarter. The company expects positive pricing contributions and major cost savings in the latter half of 2024, aiming to maintain its full-year margin target despite challenges from weak European demand.

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