(ABM FN-Dow Jones) European stock markets are heading for a red open on Wednesday, following losses in Asia and a red close on Wall Street on Tuesday night.
IG expects an opening loss of 61 points for the German DAX and -23 points for the French CAC 40. And it looks like the British FTSE is ready to open 14 points lower.
Stock markets in Europe ended lower on Tuesday.
“European markets continue to look weak, with the FTSE 100 and DAX indices dropping to a one-month low after recent economic data out of China came in worse than expected,” said Michael Hewson, market analyst at CMC Markets.
There were already concerns on Monday about the Chinese real estate sector and potential defaults of a few large Chinese asset managers, so disappointing economic data followed tonight. For example, it turns out that retail sales in China rose again less sharply in July. Sales increased 2.5 percent year-on-year last month, after rising 3.1 percent in June. In May sales rose by 12.7 percent and in April by 18.4 percent.
Chinese industrial production was also disappointing. It did rise in July, but less sharply than it did a month ago, and as expected by economists. Output increased 3.7 percent year-on-year, after rising 4.4 percent in June. Economists had expected an increase of 3.8 percent in July.
Beijing cut two key interest rates in response, suggesting the country’s benchmark interest rate is also likely to drop later this month. The People’s Bank of China has also injected hundreds of billions of yuan.
These measures did little to allay fears, according to Howson.
It was also reported that the unemployment rate in the UK increased in the three months to June. In the related period, the seasonally adjusted unemployment rate was 4.2 percent, 0.3 percentage points higher than the previous quarter. Wage growth in the private sector was 8.1 percent, up from 7.9 percent in the previous month.
The next reference point in the UK is the inflation data which will be released on Wednesday. ING economists expect the Bank of England to raise interest rates again in September, but there is more uncertainty about November.
The German ZEW index rose from minus 14.7 to minus 12.3, which is better than analysts’ negative forecast of 14.4, but the index is still well below zero.
The Japanese economy grew faster than expected in the last quarter. On a quarterly basis, there was growth of 1.5 percent, compared to growth of 0.9 percent in the first quarter. Growth was also stronger than analysts expected. Even the Japanese economy grew 6.0 percent year on year in the last quarter. The growth was mainly driven by strong foreign demand. The reaction of the Japanese stock market was positive. The Nikkei 225 index rose 0.6 percent on Tuesday to 32,238.89 points.
Philips was one of the few white crows on the European stock exchange floors and managed to add more than half a percent in Amsterdam, after the share price had already benefited greatly on Monday from the news that Exor had bought a 15 percent stake in Philips.
Payment specialist Adyen was nearly 4 percent lower.
In Frankfurt, Sartorius was one of the winners, making more than one percent, and Adidas stock rose about one percent. Earnings were also modest. Vonovia was at the bottom of the DAX with a loss of 2.5 percent. Elsewhere in Europe, property stocks have also suffered.
In Paris, all shares are priced in the red, but the financials still limit the damage somewhat. Teleperformance was the biggest loser, losing nearly 2.5%. Real estate company Unibail-Rodamco-Westfield lost 2 percent, as did Stellantis.
In London, Marks and Spencer was 8 per cent higher. The forecasts issued by the retailer were enthusiastically received.
Carlsberg raised its earnings forecast on Tuesday and launched a new share buyback program equivalent to 134 million euros. The brewery is up about 2 percent in Copenhagen.
Pandora reported better-than-expected quarterly results and expectations have been raised. The stock rose more than 2.5 percent on the Danish Stock Exchange. Analysts at RBC expect a revision of the consensus to the upside.
Euro Stoxx 50 4,287.02 (-1.0%)
Stokes Europe 600 455.57 (-0.9%)
DAX 15,767.28 (-0.9%)
CAC 40 7,267.70 (-1.1%)
FTSE 100 7,389.64 (-1.6%)
SMI 10,985.22 (-1.1%)
ACS 759.28 (-0.9%)
Bell 20 3,672.40 (-0.4%)
FTSE MIB 28,435.49 (+0.6% – Monday close)
IBEX 35 9,347.50 (-0.9%)
On Wednesday, Wall Street will experience a green open after closing lower on Tuesday. Investors await the minutes of the Federal Reserve’s latest policy meeting, scheduled for Wednesday evening.
Minneapolis Federal Reserve Chairman Neel Kashkari did not comment on Tuesday on whether the Fed is done raising interest rates.
“Are we done with raising interest rates? I’m not ready to say we’re done,” said Kashkari, who has voting rights on the policy committee this year.
Kashkari went on to say that given the recent positive signs about inflation, the Fed “may take a little bit longer to get a little bit more data out before we decide to do more.”
“We still have a long way to go from cutting rates because core inflation is still around 4 percent,” said the Fed’s executive director.
Macro data from the US showed a mixed picture on Tuesday. Retail sales rose 0.7 percent in July. Analysts expected an increase of 0.4 percent.
ING economists said the figures again provided a positive surprise and suggest that economic growth of 3 percent annually is possible in the third quarter, but there are more challenges in the fourth quarter.
Economists expect that high financing costs for consumers, reduced availability of credit, depletion of savings from the Corona period, and the resumption of student loan repayments will pose significant challenges to activity in the last three months of the year.
The concern is that this will also increase the likelihood of a recession, according to ING, which will discourage the Fed from raising interest rates further.
The Empire State Index was a clear macroeconomic setback on Tuesday. The index fell sharply by about 20 points below zero. A negative number indicates that the managers consulted are mostly pessimists.
Economists often use previously released regional economic surveys, such as the New York Fed Index, as an indicator of the development of national data that is released with a greater delay.
US import prices rose again on a monthly basis in July, while confidence among US homebuilders fell sharply in August. NAHB noted the dramatic increase in the mortgage interest rate, which is now close to 7%. Construction costs are also rising.
It quoted the ten-year rate on Tuesday evening as 4.22 percent. The price of oil fell further. At a settlement of $80.99, the price per barrel of WTI is nearly 2 percent lower.
Nvidia shares rose about half a percent on Tuesday, closing at just over $439. Wells Fargo raised the price target for Nvidia by $50, to $500.00. On Monday, the stock closed at $437.53, supported by a positive report from Morgan Stanley analysts.
Home Depot came up with numbers that showed a decrease in sales volume and profits, but the decline in profits was less than expected. The do-it-yourself chain reiterated its 2023 forecast and announced it would buy back shares for $15 billion. The stock rose just over half a percent.
Bill Ackman of Pershing Square Capital increased his stake in Alphabet, Google’s parent company, but reduced stakes in Chipotle Mexican Grill and Lowe’s. Alphabet shares lost just over one percent, while Chipotle closed slightly lower and Lowe’s also lost.
Shares of homebuilder DR Horton gained more than 3 percent after Warren Buffett’s Berkshire Hathaway acquired a stake in the company.
PayPal shares lost 6 percent. Elliot Investment Management sold its position in the payments business last quarter.
Tesla has released lower-cost versions of its most expensive cars in the US, the Model S and Model X, which cost $10,000 less and get fewer miles per charge. This was evident from the information on the company’s website. The stock fell nearly 3 percent on Tuesday.
Shares of Hawaiian Electric Industries fell more than 32 percent on Tuesday after several class-action lawsuits were announced against the company and its subsidiaries in the wake of devastating wildfires in Maui. Hawaiian Electric Industries is the largest energy supplier in Hawaii. S&P Global Ratings downgraded the rating to BB- and placed the company negative on CreditWatch.
S&P 500 4,437.86 (-1.2%)
Dow Jones 34,946.39 (-1.0%)
Nasdaq Composite 13,631.05 (-1.1%)
Asian stock markets fell broadly on Wednesday.
Nikkei 225 31,857.48 (-1.2%)
Shanghai Composite 3,168.32 (-0.3%)
Hang Seng 18,323.22 (-1.4%)
The EUR/USD traded at 1.0907 this morning. On Tuesday evening, the currency pair was quoted at 1.0901.
USD/JPY 145.48 yen
EUR/USD EUR 1.0907
Euro / Japanese Yen 158.68
08:00 Consumer and Producer Prices – July (UK)
09:30 Domestic Consumption – Jun (NL)
09:30 Economic Growth – Second Quarter vlpg (NL)
09:30 International Trade – Jun (NL)
11:00 Industrial Production – June (EUR)
11:00 Trade Balance – June (EUR)
11:00 Economic Growth – Second Quarter, Second Estimate (EUR)
1:00 PM Mortgage Applications – Weekly (US)
2:30pm Housing and Permits – July (US)
15:15 Industrial Production – July (US)
4:30 PM Oil Inventories – Weekly (US)
20:00 minutes Fed (United States)
09:00 ABN AMRO – ex-dividend
00:00 Tencent – Q2 numbers (Qi)
13:00 Target – US Q2 numbers
22:00 Cisco – US fourth quarter numbers
Source: ABM Financial News
ABM Financial News is a resource for stock market news, video and data, for both online and offline real-time trading platforms, trading rooms and media publications. The information in this article is not intended to be professional investment advice or as a recommendation to make certain investments.
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