Europe: Italian shares lag peers as banks drag, investors await Federal Reserve minutes
ITALIAN shares lagged European peers on Tuesday as banking stocks weighed, while investors awaited minutes from the Federal Reserve’s latest meeting to support bets that policymakers are done with interest rate hikes.
The pan-European Stoxx 600 slipped 0.1 per cent, while Italy’s FTSE MIB index closed 1.3 per cent lower recording its worst daily performance in a month.
Monte dei Paschi di Siena lost 7.9 per cent after Italy sold a 25 per cent stake in the bailed-out bank.
Banco BPM fell 4.0 per cent after Deutsche Bank downgraded it to “hold” from “buy” and removed it from its EU banks top picks.
Minutes from the Fed’s latest policy meeting, where it held rates steady, are due at 1900 GMT (2 pm ET).
“The theme permeating the market is the Fed’s battle with inflation has been won and that despite what the likes of Powell and his colleagues might be saying about another hike still being on the table, market does not really believe that message anymore,” said Stuart Cole, head macro economist at Equiti Capital.
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Meanwhile, European Central Bank (ECB) officials have actively tried to shoot down growing bets of rate cuts amid data signalling a sustained fall in inflation and a likely recession.
ECB policymaker Francois Villeroy de Galhau argued rates will likely remain unchanged for the next few quarters, a day after Pablo Hernandez de Cos noted it was “premature” to talk about rate cuts.
European equities are forecast to eke out a modest rise in 2024, a Reuters poll found, as optimism that global interest rates have peaked is offset by worries the economy could fall into a recession.
Rate-sensitive real estate stocks led sectoral losses, shedding 2.1 per cent.
CPI Property Group closed 2.8 per cent higher after falling as much as 6.2 per cent after short-selling hedge fund Muddy Waters said it had bet against the credit of the Luxembourg-based commercial landlord.
Teamviewer dropped 12.4 per cent after Deutsche Bank on behalf of TigerLuxOne (Permira) launched a placement of 13 million shares in the German software company at a discount of about 8 per cent to Monday’s closing price.
GEA Group slid 5.4 per cent after a bookrunner said Groupe Bruxelles Lambert SA’s unit Oliver Capital was selling 11.25 million shares in the German food-processing equipment maker.
LVMH eased 1.9 per cent after UBS downgraded the French luxury giant to “neutral” from “buy”. The sector was down 0.6 per cent.
Swiss hearing aid maker Sonova topped the Stoxx 600, gaining 5.4 per cent after a smaller-than-feared warning on annual core profit.
Rheinmetall gained 3.7 per cent as the German arms company expects sales of 13 billion to 14 billion euros (S$19 billion to S$20.4 billion) in revenue in 2026 and operating margins of more than 15 per cent. REUTERS
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