Newscasts - Europe Today: Shares struggle to keep pace with global rally

BMW Industries

01/08/2024 11:02

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Source: 'Reuters - Business videos'

Description: European shares mostly opened lower on Thursday, defying a rally
in the US overnight. The losses were led by the continent's automakers, who
continue to report lower sales from China.
Short Link: https://refini.tv/3A0JeLO

Video Transcript:

European shares struggle to keep pace with the global rally weighed down by
car maker earnings. Welcome to Europe Today. I'm Thomas Warner. European
shares mostly opened lower on Thursday, defying a rally in the US overnight.
Comments from the Federal Reserve on Wednesday, raised hopes for a September
rate cut, giving Wall Street a major boost. But a glut of corporate earnings
here in Europe weighed more heavily in the balance. The auto-sector fell the
most, dropping 1.4% at the open, weighed down by Volkswagen and BMW in
particular. VW reported a 2.5% fall in second quarter profits this morning,
sending shares down around 2%. Europe's biggest car maker warned that its
current cost-cutting period will now extend into 2025. Earnings were also
dented by lower sales in China and expenses linked to VW Bank Russia. BMW
reported a lower-than-expected profit margin in its core automotive segment
during the second quarter. The Munich based car maker saw a 4% slump in its
revenue from China in the first six months of this year, but performed better
in the region than VW or Mercedes. Its shares were also down around 4%.
Ferrari also reports on Thursday. In France, shares in Societe Generale
slumped more than 6%, despite the bank beating profit estimates for the second
quarter. Investors were spooked by the cutting of a key target for its French
retail activities. And beer giant, Anheuser-Busch InBev reported forecasts
beating core profit for the second quarter, as cost-discipline measures paid
off, its shares rose more than 3%. Investors see the period as a return to
normality, following a period of high inflation. Shell reported second quarter
profit of $6.3 billion, that's a quarterly drop of 19% but still above
analysts’ forecasts. CEO Wael Sawan said the energy system is moving back
towards pre-2022 normalized levels. Energy prices surged after Russia invaded
Ukraine, pushing oil and gas companies profits to record highs. The Bank of
England is expected to announce a cut to interest rates when it reports at
11:00 GMT today. Markets currently put the chance of a cut at around 61%.
British two-year government bond yields fell to their lowest since May 2023,
while five-year yields hit a six-month low, ahead of the decision. It follows
comments from Fed chair Jerome Powell yesterday, which raised hopes for a
September rate cut.


If we were to see, for example, inflation moving down quickly or more or less
in line with expectations, growth remains, let's say reasonably strong and the
labor market remains, you know, consistent with its current condition, then I
would think that at a rate cut could be on the table at the September meeting.


And oil prices rose on Thursday, extending gains from the previous session
after the killing of a Hamas leader in Iran, raised threat of a wider Middle
East conflict. The front month ice Brent contract and WTI are both up more
than $0.50 per barrel so far today, having gained more than $2.00 per barrel
each on Wednesday. And that's it from Europe Today