Tuesday was a cautious trade day for European stocks, as investors were wary ahead of this week’s policy meetings by two important central banks set this week.
European shares also fell due to traders digesting another set of earnings, and lender and energy shares leading the decline.
Initially in European morning trade, shares opened mixed:
- EURO STOXX 50 was up 0.07% but is now trading at 2,965.50, lower 0.10% as of 09:00 GMT;
- French CAC 40 dipped 0.21% and is currently lower at 4,369.00, down 0.43% as of 09:00 GMT;
- Germany’s DAX 30 was higher at 0.06%, but fell to 10,196.00, down by 0.02% as of 09:00 GMT.
Fed, BoJ Meetings
European markets are monitoring for any news on the Federal Reserve as the central bank begins its two-day monetary policy meeting on Tuesday.
Optimistic US data posted recently continue to boost hopes for the Fed to increase interest rates in the near-term, possibly as early as September, although expectations are mostly betting on December.
Most investors expect the Fed to keep its monetary policy unchanged this week. Nonetheless, it may give clues on the timing of future hikes.
Market players are also anticipating Friday’s policy statement by the Bank of Japan, amid rising bets for the announcement of further stimulus measures. The BoJ will host its own two-day monetary policy meeting on Thursday.
The period for earnings continued today, July 26, 2016.
Tire-maker Michelin in France posted a 9% increase in first-half profit despite a sales decline, supported by cost-slashing measures that pushed shares into the positive. French car parts supplier Faurecia, meanwhile, led the gains in Europe, nudged higher over 5% after reporting a whopping 50% rise in first-half net income.
However, for telecoms firm Orange, despite repeating its 2016 full-year guidance after announcing a sharp gain in net profit, its shares had tumbled due to the purchase of its 50% stake in EE to BT.
Meanwhile, oil giant BP posted Q2 profit at $720 million on an underlying replacement cost basis, lower from $1.3 billion in the same period last year. BP added that it had “drawn a line under the material liabilities for Deepwater Horizon” which has cost the firm $61.6 billion. Stock also traded lower, amid a general decrease in the oil and gas sector due to the recent crude plunge brought by oil glut worries.
Elsewhere, fund manager Man Group fell to the negative following its statement of half year pre-tax profit dropping a steep 66% year-on-year. Its funds under management also toppled 3%.
Covestro, a German plastics maker, increased its full-year outlook after it posted Q2 adjusted core profit rising 8.8% year-on-year, leading shares broadly higher.
In the financial sector, Commerzbank AG slipped 6% in the second quarter with a drop in its operating profit and capital buffer.
Banks in Italy also fell, prior to regulators posting the freshest health check on Europe’s largest lenders on July 29. Although Pier Carlo Padoan, the Italian Finance Minister, told news site CNBC earlier this week that there is “no banking problem” in the country.
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