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Yahoo
04-04-2025
- Business
- Yahoo
European Stocks Sink Into Correction as Trade Worries Escalate
(Bloomberg) -- European stocks tumbled into a correction on Friday as China retaliated against US tariffs, escalating the global trade war. Housing Agency Aims to Relocate Its DC Headquarters Metro-North Is Faster Than Acela on NYC-New Haven Route After Signal Updates Local Governments Vie for Fired Federal Workers London Clears Final Hurdle for More High-Speed Trains to Europe What Would 'Transportation Abundance' Look Like? The Stoxx Europe 600 Index slid 5.1% at the close in London, recording its worst weekly drop since the outbreak of the Covid-19 pandemic five years ago. Indexes in Italy, France, Switzerland and Germany were also in correction territory after news that Beijing would impose a 34% tariff on all imports from the US, starting April 10. Banks were the biggest laggards, with the Stoxx 600 Banks Index sinking as much as 10%. Italy's FTSE MIB Index — weighed down by the weakness in banking stocks — led losses among major European benchmarks with a 6.5% slide. 'Every portfolio has to adjust themselves for a recession in a lot of countries,' said David Kruk, head of trading at La Financiere de L'Echiquier. 'Yesterday, the US bore the brunt of the selloff. Now it's our turn.' Still, data showing better-than-expected US job growth in March was somewhat reassuring, according to Amelie Derambure, senior multi-asset portfolio manager at Amundi SA. 'If the data had been really bad, it would have led to the conclusion that the Trump administration and the uncertainty around its policies were already triggering a recession,' said Derambure. Traders had earlier boosted their expectations for the US Federal Reserve to cut interest rates this year. Among individual stock movers, Gerresheimer AG fell 15% after Bloomberg News reported KKR & Co. has walked away from a consortium discussing a takeover of the German maker of drug packaging. Here is what market participants are saying: Max Kettner, HSBC chief multi-asset strategist: 'We don't think the correction is over yet. In fact our measures of sentiment and positioning are still ambiguous at best. Our momentum signals indicate that typical trend-following strategies are still only medium short, and equity exposure on our measure of long-only investors has barely budged so far. Equity market breadth in the S&P500 is nowhere near capitulation levels yet, and in fact is even still much higher than during the rates-driven dip in January. The average stock has actually been flat YTD until yesterday, so we do think there's quite a bit more pain to come until the Fed put can step in' Vincent Juvyns, global market strategist at JPMorgan Asset Management: 'Let me be clear, in no way is this capitulation, it's a slap in the face but this is not capitulation. Indeed you can see that it's the best performing stocks and indexes that are falling the most, like banks, because that's where investors can take their profits. But let me be clear and I say that with conviction: for a long term investors, this selloff creates a lot of buying opportunities. The selloff is overdone in my opinion. Yes there's going to be macro-economic consequences to the tariffs but my point is that for diversified investors, bonds are perfectly doing their job in cushioning the fall in equities' Neil Birrell, chief investment officer at Premier Miton Investors: 'The bifurcation you're getting within different markets is extraordinary. Within equities, it's get out of anything that's rate-sensitives, get into safety' Aneeka Gupta, head of macroeconomic research at Wisdom Tree UK Ltd: 'It's unprecedented to see this in the second day in a row. China's response is predominantly setting the stage. The likelihood now is that if with China leading the way, we're likely to get more countermeasures being put in place by other economies. Right now for market, you could compare it with catching a falling knife. It's quite a difficult situation' Janet Mui, head of market analysis at RBC Brewin Dolphin: 'I think people are fleeing for safety now because the situation appears to be spiraling downward. It is hard to see a scenario where most of the tariffs will be rolled back in the near term. The sentiment shock is going to inflict a lot of harm for both the U.S. and elsewhere' Raphael Thuin, head of capital markets strategies at Tikehau Capital: 'Today we've entered an escalation phase with countries starting to retaliate and it's not possible to know how this will end. We must get used to the idea that this a regime change: growth expectations will be cut down and inflation forecast revised upwards. Even if one ignores for a minute the immediate market action, long term, the horizon has darkened. What's also worrying is that central banks won't be in a position to weigh in that much given that this new cycle is an inflationary one' Susana Cruz, Panmure Liberum strategist: 'It looks like investors are playing it safe, with the announcement of Chinese retaliations adding to the already growing recession risks. They seem to be bracing for more bad news, as sectors with strong momentum before the tariffs, like European banks and industrials, face a deeper selloff. Quality stocks and low volatility are providing some shelter amid the storm.' For more on equity markets: Timing to Go Defensive Has Rarely Been Better: Taking Stock M&A Watch Europe: KKR, Gerresheimer, Carrefour, Shell, BTG, BP Gulf Listings Feeling the Heat on Earnings Misses: ECM Watch US Stock Futures Fall as Sentiment Remains Fragile on Tariffs Trump's 10% Slap: The London Rush You want more news on this market? Click here for a curated First Word channel of actionable news from Bloomberg and select sources. It can be customized to your preferences by clicking into Actions on the toolbar or hitting the HELP key for assistance. To subscribe to a daily list of European analyst rating changes, click here. --With assistance from Sagarika Jaisinghani, Allegra Catelli, Levin Stamm and Paul Jarvis. With Shake Shack in First Class, Airline Food Is No Longer a Joke LA Fire Victims Are Betting on a Radical Idea to Help Them Rebuild India's Destination Weddings Fuel a New Tourist Economy China Tells Kids to Study Manufacturing to Fill Factory Jobs Trump's IRS Cuts Are Tempting Taxpayers to Cheat ©2025 Bloomberg L.P.
Bloomberg
04-04-2025
- Business
- Bloomberg
Europe's Banks Lose Best-Performing Sector Crown on Growth Woes
Banks are no longer the best-performing sector in Europe this year as US President Donald Trump's trade tariffs raise recession concerns. The Stoxx 600 Banks Index fell as much as 10% on Friday, its biggest drop since March 2020, as Societe Generale SA, UniCredit SpA, Banco Santander SA and BNP Paribas SA sank. Lenders have been replaced at the top of the rankings year-to-date by utilities, which gained as investors looked for defensive assets after the US imposed 20% reciprocal duties on the European Union.
Bloomberg
04-04-2025
- Business
- Bloomberg
Stock Movers: Deutsche Bank, Gerresheimer, Danone
On this episode of Stock Movers: - Banks is the worst-performing sector in Europe for a second day as the global equity rout continued on fears economic growth will be hit by US tariffs. The Stoxx 600 Banks Index sinks 4% as of 9:27 a.m. CET, extending weekly declines to 10%, the steepest drop since March 2023 The sector is still up 12% YTD. Deutsche Bank, Banco De Sabadell are down more than 5% - KKR has walked away from a private equity consortium discussing a takeover of Gerresheimer AG, the German maker of packaging for drugs and cosmetics, people familiar with the matter said. The buyout firm had teamed up with Warburg Pincus to pursue a deal for Gerresheimer, Bloomberg News reported in March. Warburg Pincus is still working to see if it can reach a deal, according to the people, who asked not to be identified discussing confidential information. - Danone shares rise as much as 2.7% to hit their highest level in over five years after analysts at Morgan Stanley said they now prefer the stock over Nestle, arguing the French food company is trading at an 'unwarranted' discount to its Swiss peer given its more attractive setup.
Bloomberg
28-03-2025
- Automotive
- Bloomberg
Stock Movers: Societe Generale, Ferrari, Adidas
On this episode of Stock Movers: - The rally in European banking stocks shows few signs of cooling down after another stellar quarter. The Stoxx 600 Banks Index has surged 25% this year, its best three months since 2020. That's made it the top-performing sector in Europe by far as investors keep increasing their exposure, and strategists see more gains ahead. - Ferrari gets buy-equivalent ratings at Barclays and Kepler Cheuvreux after the Italian sportscarmaker confirmed its financial guidance for the year following a recent share-price slide. Both brokers cited the firm's 'unique' resilience. - European sports apparel stocks are in focus on Friday after Lululemon Athletica shares dropped after the US brand delivered a disappointing outlook for the year and voiced concerns about consumer spending. We're watching Watch Adidas and Puma in Germany, and sports retailers JD Sports and Frasers (Sports Direct) in London.
Yahoo
28-03-2025
- Business
- Yahoo
European Banks Have Best Quarterly Streak Since Financial Crisis
(Bloomberg) -- The rally in European banking stocks shows few signs of cooling down after another stellar quarter. Why Did the Government Declare War on My Adorable Tiny Truck? How SUVs Are Making Traffic Worse Gold-Rush Fever Returns to Historic New Zealand Mining Town Trump Slashed International Aid. Geneva Is Feeling the Impact. These US Bridges Face High Risk of Catastrophic Ship Strikes The Stoxx 600 Banks Index has surged 25% this year, its best three months since 2020. That's made it the top-performing sector in Europe by far as investors keep increasing their exposure, and strategists see more gains ahead. Their appetite is being driven by series of factors: firstly strong earnings seasons, hefty share buybacks and M&A potential, and now massive public spending plans that will probably keep European interest rates high. Over a 10-quarter winning streak — the longest since before the financial crisis — banks have returned over 160% including dividends, triple the 52% for the broader Stoxx Europe 600. 'The operating environment is very different today to almost any time over the past 20 years – we have banks talking about loan growth again, an upward sloping yield curve and governments at least talking about reducing the regulatory burden,' said Keefe, Bruyette & Woods's head of European bank research Andrew Stimpson. 'That likely means there is still more good news.' Following this run, some bears had expected lenders' outperformance to start fading, particularly as central banks are now cutting rates. Instead earnings have proved their business remains resilient, while buyback programs are also driving up shares. The likes of Societe Generale SA, Commerzbank AG and Banco Santander SA — repurchasing their own shares — have climbed more than 40% this year. The latest tailwind has been Germany passing a landmark spending package, creating a potentially unlimited supply of money to rearm to deter Russia. It will also set up a €500 billion ($540 billion) fund to invest in the country's aging infrastructure. The country's banks are set to benefit, with Deutsche Bank AG jumping 35% this year to trade near 10-year highs. 'The shift in fiscal policy will likely drive a stronger outlook for loan growth given the increased government expenditure on defense, infrastructure, and state/local projects,' JPMorgan Chase & Co. analysts led by Kian Abouhossein wrote in a note. They expect a long term re-rating for lenders in the region. The geopolitical landscape, along with cooling inflation, are reducing the chances of the European Central Bank cutting rates below 1.5%, implying less pressure on lending revenue, the JPMorgan analysts said. While the ECB this month lowered rates for the sixth time since June, it indicated its cutting phase may be drawing to a close. The combination of lower rates and longer-term government borrowing plans has steepened the German bond yield curve the most since 2021. That means banks are able to borrow money at a lower cost and lend at higher rates. Investors keep upping their exposure. According to Bank of America Corp.'s European fund manager survey this month, positioning in financials has increased, with banks now the largest sector overweight in Europe. And half of European investors think lenders still look attractive, up from 41% a month earlier, it found. The last earnings season proved profitability remains robust. The sector delivered 'another quarter of positive surprises,' Jefferies analysts said, noting the solid performance of net interest income. The European Union's largest banks posted another record year for profit, while 20 banks in the region announced over €18 billion in share buybacks during the first two months of the year alone. Mergers and acquisitions also remain a hot topic. Spain's BBVA SA is waiting for approval for its hostile bid for smaller lender Banco Sabadell SA, while Italy's UniCredit SpA has a move on both Commerzbank and Banco BPM. Easy Money Some analysts are questioning how long the positive fundamentals can last. After the series of stellar earnings seasons, profit growth is expected to plateau. The consensus for the sector sees very little return on average over the next 12 months, so the potential upside lies more with sentiment and valuation expansion. For Roberto Scholtes, head of strategy at wealth manager Singular Bank, the banking rally has been sound and based on genuine improvement in profitability, but the 'easy money' has already been made. 'Valuations are no longer that cheap, expectations aren't depressed, investor positioning is already quite long, and net interest margins are at an inflection point,' he said. Positioning is now a more crowded bet. Lenders were deeply overbought for much of January and February, and valuations are closing in on their long-term average. The sector now trades at about nine times forward earnings, yet it remains the second cheapest in Europe after autos. Banks are also on par with their forward book value, only half the level seen before the global financial crisis, implying there is still room to run. Deutsche Bank strategists including Maximilian Uleer and Carolin Raab are 'optimistic on banks given structurally higher bund yields, an economic recovery and a steeper yield curve.' 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