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

The DAX chart of the German stock price index is pictured on the stock exchange in Frankfurt, Germany, June 2, 2022. REUTERS/Staff

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  • Credit Suisse announces probable Q2 loss
  • Inditex, owner of Zara, lifts retailers as profits rise
  • Traders see ECB rate hikes at 75 basis points by September

June 8 (Reuters) – European shares tumbled on Wednesday as Credit Suisse tumbled 6% following a profit warning that weighed on lenders, as investors braced for the meeting. the European Central Bank on Thursday and that of the US Federal Reserve next week.

The pan-European STOXX 600 index (.STOXX) fell 0.3% for the last time, giving up opening gains.

Banks (.SX7P) fell 0.7% after Credit Suisse (CSGN.S) said it was at risk of a group-wide loss in the second quarter as volatility hit its bank d ‘investment. Read more

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“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 losses, energy stocks (.SXEP) rose as oil prices traded higher on expectation of weak US stocks.

Retailers (.SXRP), which slid on Tuesday after U.S. counterpart Target warned of further margin compression, rose 1.6%, with Zara owner Inditex (ITX.MC) up 4, 6% after announcing an 80% increase in its net profit for the month of February. -April period. Read more

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. find out more

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. Read more

Among other stocks, Wizz Air (WIZZ.L) fell 5.5% after the European budget airline reported a bigger annual loss on soaring fuel costs and said it was deploying resources to minimize disruptions due to staffing shortages and supply chain issues. Read more

Swedish online gaming group Kindred (KINDsdb.ST) jumped 10.8% after securing a gaming license in the Netherlands.

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Reporting by Susan Mathew in Bengaluru; Editing by Subhranshu Sahu

Our standards: The Thomson Reuters Trust Principles.

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