Europe midday: Investors pause for breath amid bad news for German and Italian economies
Intermediate Capital Group
1,964.00p
16:15 25/04/24
Stocks on the Continent are trading slightly lower as investors pause for breath amid a spate of downbeat news on the euro area's economy.
Financial Services
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FTSE 250
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UniCredit
€8.88
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Key among the latter were figures revealing what some economists termed a full blown recession in German manufacturing, although previous releases had already hinted at that.
Although some profit-taking was perhaps to be expected following the large gains seen over the prior two sessions, CMC Markets UK's Michael Hewson termed early losses for the region's stock markets on Thursday "disappointing".
On a considerably more downbeat note, in his annual letter to shareholders, JP Morgan boss Jamie Dimon said the pronounced volatility that slammed global financial markets at the end of 2018 might be the new normal for investors, as a result of the scarce liquidity in financial markets that tougher regulations had led to and emphasised the role that increased geopolitical tensions might play.
"There are growing geopolitical tensions with less certainty around American global leadership," Dimon said
As of 1217 BST, the benchmark Stoxx 600 was down by 0.29% to 387.81, alongside a gain of 0.14% to 11,970.60 for the German Dax while the FTSE Mibtel was off by 0.38% at 21,673.45.
In parallel, euro/dollar was little changed, drifting lower by 0.05% to 1.12275, while the yield on the benchmark 10-year German bund was retracing a bit of the previous day's rise and off by two basis points to -0.01%.
To take note of, investors were also biding their time ahead of the monthly US jobs report for March, which was set for release the next day, even as they scanned the incoming headlines for fresh news on US-China trade talks and Brexit.
Against that backdrop, the Federal Office of Statistics reported earlier that German manufacturing orders plummeted at a month-on-month pace of 4.2% (consensus: 0.3%), as orders from outside the Eurozone plunged by 7.9% and those for capital goods shrank by 6%.
Claus Vistesen at Pantheon Macroeconomics conceded that the pace of decline was "startling" but added "these data don’t tell investors anything they didn’t already know about the German economy."
Elsewhere in Europe, Bloomberg reported that Italian authorities were set to lower their 2019 GDP growth forecast from 1.0% to 0.1%, although that would simply bring government projections in-line with the consensus view of economists.
On the corporate side of things, shares of lenders were in focus after the Financial Times reported that Italy's UniCredit could be plotting a bid for German rival Commerzbank.
But analysts were generally sceptical, with Hewson musing: "ow the German government will allow a foreign takeover of its second-largest bank remains to be seen, especially if that takeover is followed by heavy cost-cutting and job losses."
Lenders' shares were in focus after the Financial Times reported that Italy's UniCredit could be plotting a bid for German rival Commerzbank.
But analysts were generally sceptical, with Hewson musing: "ow the German government will allow a foreign takeover of its second-largest bank remains to be seen, especially if that takeover is followed by heavy cost-cutting and job losses."
On the deals front, Bloomberg reported that Intermediate Capital Group was close to clinching a deal to buy out Doc Generici, the Italian generic drugs maker, from GVC Capital Partners.