European stock markets extended losses on Wednesday following the worst session for a month.
The benchmark Stoxx 600 was down 0.35% at 9:30 a.m. in London, with oil and gas up 1% as the lone sector in the green while travel stocks fell 1%.
International Distribution Services, owner of Britain’s Royal Mail, rose 3% after accepting a 3.57 billion pound ($4.56 billion) takeover deal from Czech billionaire Daniel Kretinsky. Mining giant Anglo-American slipped 1.5% after BHP Group, which has put in a takeover bid for the company, said it needed more time for talks.
The Stoxx dropped 0.6% on Tuesday, its steepest loss since April 30, as investors focus on the interest rate outlook and monitor rising global bond yields.
A solid crop of first-quarter and full-year earnings has put the index on course for a monthly gain.
“Earnings season was generally better than feared,” Marcus Morris-Eyton, portfolio manager for Europe and global growth at AllianceBernstein, told CNBC’s “Squawk Box Europe” on Tuesday.
“51% of companies beat expectations, but actually two thirds of companies beat or met expectations, and when you dig beneath the surface what is particularly interesting is the margin strength across European companies during the quarter,” Morris-Eyton said.
“What that’s indicative of is that companies are so far managing to hold on to many of the price increases they pushed through during that Covid period, so as inflationary pressures are reducing, companies are holding on to those pricing gains that are benefiting the margin line,” he added.
However, as the flow of earnings has dried up, attention has shifted back to the plans of the world’s major central banks as they express caution over the inflationary outlook.
Minneapolis Federal Reserve President Neel Kashkari told CNBC on Tuesday it would take “many more months of positive inflation data” to give him confidence it is time to cut rates.
European Central Bank Governing Council member Klaas Knot meanwhile said in a London speech that it will “soon” be appropriate to move toward less restrictive monetary policy, but that easing must go “slowly” and “gradually” from there.
Inflation data is due from both the eurozone and the U.S. on Friday.
Source: https://www.cnbc.com/2024/05/29/europe-markets-open-to-close-rate-cuts-inflation-stocks-.html
