4 C
New York
Tuesday, December 5, 2023

European stocks edge lower; Italian banks, Chinese trade data weigh

European stocks edge lower; Italian banks, Chinese trade data weigh
© Reuters

 

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Investing.com – European stock markets edged lower Tuesday, as investors digested the latest German inflation numbers, Italian banking weakness and disappointing Chinese trade data.

At 03:50 ET (07:50 GMT), the DAX index in Germany traded 0.2% lower, the CAC 40 in France edged lower and the FTSE 100 in the U.K. dropped 0.1%.

German annual inflation slows in July

Germany started the week’s key inflation releases from around the globe, with data released earlier Tuesday showing that consumer prices in Europe’s largest economy increased 0.3% on the month in July, matching the June number.

The annual figure fell to 6.2% from 6.4% the prior month, an indication that prices are falling in the eurozone’s most important economy, something that could persuade the European Central Bank to pause its prolonged tightening cycle at its next policy meeting in September.

This release is a prelude to the highly anticipated inflation figures from China overnight and the United States on Thursday, which are likely to set the tone for the rest of the week.

China trade data disappoints

Global stocks have been boosted by raised expectations that the U.S. economy will have a soft landing this year, avoiding recession as the Federal Reserve ends its aggressive interest rate hikes sooner than had been feared.

Further signs that U.S. inflation is slowing would add to that narrative, as could comments from the likes of Philadelphia Fed President Harker and Richmond Fed President Barkin later Tuesday.

On the other hand, the Chinese economy, the world’s second-largest, is struggling, with weak trade numbers out earlier Tuesday the latest illustration of this.

China’s imports dropped 12.4% in July year-on-year, a more severe drop than the 5% forecast, while exports contracted 14.5%, steeper than an expected 12.5% decline and the previous month’s 12.4% fall.

Intesa Sanpaolo, UniCredit slump on additional tax

In Europe, the stocks of Italian banks such as Intesa Sanpaolo (BIT:ISP) and UniCredit (BIT:CRDI) fell more than 6% after the country’s government announced a new 40% tax on the “extra profits” of its banks this year.

The sector will also be in focus in the U.S. later in the session, after Moody’s credit agency downgraded the ratings of 10 small and midsize U.S. lenders.

Elsewhere, Bayer (ETR:BAYGN) stock fell 0.4% after the German drugs and pesticides maker confirmed that last month’s cut to its full-year earnings target was mainly driven by a bleaker outlook for its Crop Science and Pharma divisions.

Glencore (LON:GLEN) stock fell over 3% after the global miner said its earnings had halved in the first half.

Crude retreats after weak Chinese data

Oil prices fell Tuesday, weighed by the weak Chinese trade numbers ahead of the latest U.S. stockpile figures.

Oil imports to China, the world’s largest oil importer and second-largest consumer, in July were down 18.8% from imports in June though up 17% from a low base a year ago.

The American Petroleum Institute, an industry body, is scheduled to release its estimate of U.S. crude inventories later in the session, and is expected to show another drawdown after last week’s hefty fall.

By 03:50 ET, the U.S. crude futures traded 0.8% lower at $81.29 a barrel, while the Brent contract dropped 0.8% to $84.67.

Additionally, gold futures fell 0.2% to $1,965.55/oz, while EUR/USD traded 0.2% lower at 1.0978.

Source: Investing.com

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