European stocks slide as Credit Suisse drags banks lower after profit warning


Band Susan Mathew

June 8 (Reuters)European stocks fell on Wednesday as a 6% drop in Credit Suisse on a profit warning dragged on lenders, while investors braced for Thursday’s European Central Bank meeting and that of the US Federal Reserve next week.

The pan-European STOXX 600 index .STOXX was last down 0.3%, giving up opening gains. MKTS/GLOB

Banks .SX7P fell 0.7% after Credit Suisse CSGN.S said it was likely to see a group-wide loss in the second quarter as volatility hit its investment bank.

“The question is whether banks are able to manage volatility intelligently, and then (Credit Suisse’s warning) makes people globally nervous,” said Sebastien Galy, senior macro strategist at Nordea Asset Management.

Capping of losses, energy stocks .SXEP advanced as oil prices traded higher on expectation of low US inventories. WHERE

Retailers .SXRPwhich slipped on Tuesday after its American counterpart Target TGT warned of further margin squeeze, rose 1.6%, with Zara owner Inditex ITX.MC up 4.6% after recording an 80% jump in net profit for the February-April period.

Meanwhile, money markets stepped up their bets on ECB rate hikes to price 75 basis points of hikes by September as inflation hit a record high last month. ECBWATCH

The central bank has so far signaled hikes from July, and markets had previously forecast two 25 basis point hikes.

“It is very difficult for the ECB to deliver 50 basis points in July because it would create a lot of uncertainty, a sense of panic from the ECB regarding inflation,” Galy said.

Markets faltered as soaring prices, tighter monetary policies and uncertainties stemming from the war in Ukraine worry investors about the recession.

Some hopes come from an easing of COVID-19 restrictions in China, the world’s second-largest economy, but its zero-COVID strategy remains a concern.

“While pressure on consumers’ real purchasing power intensifies and further supply issues emanating from China’s zero-COVID strategy may arise, the risks are not necessarily on the upside from now on. ‘here,’ Citigroup strategists said.

Data released on Wednesday showed German industrial production recovered but rose less than expected.

Among other actions, Wizz Air WIZZ.L fell 5.5% after the European budget airline reported a larger annual loss on soaring fuel costs and said it was deploying additional resources to minimize disruption from staff shortages and supply chain issues.

The Swedish online game group Kindred KINDsdb.ST jumped 10.8% after obtaining a gaming license in the Netherlands.

(Reporting by Susan Mathew in Bengaluru; Editing by Subhranshu Sahu)

(([email protected];))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


About Author

Comments are closed.