Europe close: Comission supports financial transactions tax
Tue 23 Oct 2012
LONDON (SHARECAST) - -Commission supports initiative to levy financial transactions tax
-ECB (Knot): Eurobonds only when there is budget discipline
-ECB (Coeure): Will stop OMT if countries not meeting conditions
-ECB (Liikanen): Important development capital surcharges for systemic banks continues
-Spanish 10 year bond yields rise 13 basis points to 5.62 per cent
-Positive comments from Wilbur Ross on Spanish banks
European equities are now registering large drops. That on the back of weaker than expected earnings reports out Europe-wide this morning, as well over on the other side of the ‘pond.’
Furthermore, earlier today market sentiment seemed to have turned against Spain a little, despite what at first glance looked like much as expected Treasury bill auction results. Contributing to the above, ratings agency Moody’s downgraded five Spanish region’s debt ratings, two of them to junk.
The Bank of Spain however this morning released data pointing to a significantly smaller than feared contraction in the country’s economy during the third quarter, by 0.4% in quarterly rates of change (Consensus: -0.7%).
Market commentary seems to be at a bit of a loss to pin-point the exact origin of the weakness seen today in financial markets. Thus, and company earnings aside, amongst the factors which some are pointing to is that the European Commission has today indicated that it supports the initiative from 10 countries to introduce a financial transactions tax and German Finance Minister Wolfgang Schaeuble’s comments to the effect that his government will not support measures for Greece which the market considers unsustainable.
Results undershoot expectations
Norwegian aluminum producer Norsk Hydro, Europe’s third largest, registered an underlying third-quarter net loss of 20m Norwegian crowns ($3.53m).
French auto parts maker Faurecia cut its full-year earnings forecast as European auto production slows.
Swedish engineering group Alfa Laval's third quarter core earnings were below market expectations. The firm expects demand in the final quarter of the year to be flat at best.
Nokia is off by 5% after saying that it will issue 750m euros in convertible bonds.
Michelin is higher after reporting better than expected third quarter profits and revenues.
Germany's second biggest lender has mandated UBS to help it sell its custodian business, two people familiar with the transaction told Reuters.
From a sector stand-point the worst performance now on the DJ Stoxx 600 is to be seen in the following industrial groups: Chemicals (-2.75%), Oil&Gas (-2.18%) and Basic Resources (-2.02%).
French business confidence retreats
Italian non-EU trade deficit has come in at 596m Euros for September, versus -970m Euros in the month before.
INSEE’s French business confidence indicator for the month of October has fallen to the 85 point level from 90 points in the previous month (Consensus: 90).
Large drop in crude futures
The euro/dollar is now down by 0.68% to the 1.2976 dollar mark.
Front month Brent crude futures are now down by 1.644 dollars, to the 107.66 dollar mark on the ICE. That despite Iran’s threats to halt oil exports should economic sanctions against the country be tightened further (although the materialisation of such threats is considered to be extremely unlikely) .
