European markets, data, earnings, US Fed

LONDON – European equities fell on Wednesday as investors digested a profit warning from Credit Suisse, preparing for the European Central Bank’s latest political decision and a reading of US inflation.

The pan-European Stoxx 600 fell 0.6% late in the morning, with financial services falling 2% while retail shares received the downward trend and increased by 1.2%.

Credit Suisse shares fell more than 5% after the difficult lender warned that it is likely to result in a group loss for the second quarter due to the war in Ukraine and rising interest rates.

The Danish shipping giant AP Moeller-Maersk fell 7.7% to the bottom of the Stoxx 600 as a easing of restrictions in the supply chain is expected to dampen container rates.

At the top of the European blue chip index, the technology investment company Prosus jumped by 8% to track gains for the Chinese technology giant Tencent, in which it has a significant stake.

The gaming company Kindred Group rose 7% after securing a gambling license in the Netherlands.

“Equities seek to find a fragile balance between hopes that inflation is at its peak and fears of a declining economy.”[ads1];

Emmanuel Cau

Head of European Equity Strategy, Barclays

International markets have withdrawn this week due to nervousness over upcoming US data releases this week, including the latest inflation reading on Friday.

May’s consumer price index in the US is expected to be slightly cooler than in April, and some economists expect it to be able to confirm that inflation has reached its peak.

The University of Michigan’s consumer sentiment index, which also comes out on Friday, will also be closely monitored by investors.

Investors are also looking forward to the ECB’s monetary policy announcement on Thursday, with decision-makers expected to confirm intentions to raise interest rates in July.

“Equities seek to find a fragile balance between hopes that inflation is at its peak and fears of a declining economy,” Emmanuel Cau, head of European equities strategy at Barclays, said in a note on Wednesday.

“Exclusively, neither stocks nor bonds are priced for perfection anymore, while weaker growth and softer inflation expectations can come as a good result for both, if they provide more cautious Fed communications. But without evidence of a decisive fall in inflation, a central bank strike still feels far, and until the broad implications of tighter policies become clearer, markets can stay on edge. “

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Shares in the Asia-Pacific rose in trading on Wednesday, with Hong Kong’s Hang Seng index rising as Chinese technology stocks listed in the city rose.

Meanwhile, US stock futures fell in early trading before the market after two consecutive days of gains on Wall Street.

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