Live Markets: Recession fears, earnings hit European stocks
25/07/2022 08:50
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RECESSION FEARS, EARNINGS HIT EUROPEAN STOCKS (0745 GMT)
European shares slide amid growth worries and expectations
the U.S. Fed will hike rates sharply later this week.
A mixed batch of earnings results is also weighing on
stocks.
The pan-European STOXX 600 index .STOXX is 0.3% lower,
with oil producers .SXEP leading losses as crude prices fell.
O/R
In terms of single stocks, Dutch medical equipment maker
Philips PHG.AS is the worse performer, down more than 10%
after reporting a worse-than-expected drop in second-quarter
core earnings, citing supply shortages and lockdowns in China.
urn:newsml:reuters.com:*:nL1N2Z5097
(Joice Alves)
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BLUE MONDAY (0722 GMT)
U.S. Treasury Secretary Janet Yellen said on Sunday a
recession is not inevitable but most economic data has been
pointing the other way, including last week's dismal PMI
readings in the United States and Europe. urn:newsml:reuters.com:*:nL1N2Z50EE
Data or policymakers -- it's clear which of them markets
believe.
Rate-sensitive short-dated bond maturities rallied last week
while latest data showed speculators cutting bearish positions
on short-dated Treasury futures. Interest rate futures now see
the Fed funds rate peaking in January at about 3.38% --
Wednesday's projected 75 basis-point move will already take
rates to 2.5%.
As for stocks, the easing in rate-hike bets lifted equity
markets last week but the mood is sour on Monday for global
stocks (down 0.2%) as well as Wall Street futures
.MIWD00000PUS Esc1 NQc1 .
Focus now is likely to train on company earnings, with
Europe's Q2 season kicking off in earnest and more tech
mega-giants due to report stateside. Monday's crop of results
saw Ryanair post a return to profit, while Dutch medical
equipment maker Philips blamed supply shortages and Chinese
lockdowns for its earnings drop.
Still some European companies, especially luxury purveyors
such as LVMH and Hermes may find a silver lining in the euro's
10% year-to-date decline against the dollar with double-digit
sales growth, partly offsetting the China effect urn:newsml:reuters.com:*:nL8N2Z25SN.
The reverse is true across the Atlantic where companies are
increasingly bemoaning dollar strength; Morgan Stanley estimates
each percentage-point of year-on-year increase in the dollar
index cuts S&P 500 earnings growth by 0.5 percentage points
urn:newsml:reuters.com:*:nL1N2Z21X5.
But the poor global growth outlook implies the dollar will
stay strong for a while yet. After this week's Fed statement,
that may hinge on U.S. inflation easing or some truly horrendous
economic growth prints.
Key developments that should provide more direction to markets
on Monday:
-WTO meeting until July 26
-Bank of Japan brings in less dovish board member urn:newsml:reuters.com:*:nL1N2Z602Z
-German industry cuts production due to high energy prices
-survey urn:newsml:reuters.com:*:nL1N2Z5097
-July German IFO business sentiment survey
-U.S. 2-year Treasury auction
-Europe Earnings: Ryanair, Vodafone, Christian Dior
-U.S. Earnings: Newmont Mining Corp, Whirlpool, Logitech
(Sujata Rao)
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EUROPEAN SHARES SEEN LOWER ON RECESSION FEARS, BIG EARNINGS
WEEK AHEAD (0630 GMT)
European stocks are seen opening in negative territory
tracking Asian shares lower as worries about a global economic
downturn sapped investors' risk appetite.
As a big week for corporate results kicks in, the
pan-European STOXX 600 .STOXX is seeing pausing after having
its best weekly gains since May.
Swiss bank Julius Baer BAER.S says it was hit by market
downturn during first half of year. Philips PHG.AS misses Q2
forecasts, cites supply chain issues and China lockdowns.
TOP/EQE
Traders are also bracing for a for a 75-basis-point (bp)
U.S. interest rate hike this week as data points to a weakening
global economy. TOP/GLOMKT
European STOXX50, Dax and FTSE futures are trading down
around 0.5%.
(Joice Alves)
******
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