EUROPE MARKETS: European Stocks Move Lower; Luxury Stocks Feel Pressure
October 10 2018 - 05:54AM
Dow Jones News
By William Watts, MarketWatch
European equities traded lower Wednesday, with investors unable
to shake concerns about global growth prospects as they also keep
an eye on government bond yields.
What are the indexes doing?
The pan-European Stoxx 600 Europe index fell 0.3% to 371.76.
London's FTSE 100 stock index shed 0.1% to 7,229.60, while France's
CAC 40 lost 0.6% TO 5,285.57 and Germany's DAX was off 0.5%.
Italy's FTSE MIB stock index saw modest pressure after a Tuesday
rebound brought about by a respite in the rise of Italian bond
yields. The index edged down 0.1% to 20,034.44.
What's driving the market?
Italian yields were back on the rise Wednesday after Italy's
deputy prime minister, Matteo Salvini, who is the leader of the
far-right League party, reportedly insisted
(http://www.ansa.it/english/news/politics/2018/10/10/budget-wont-change-for-spread-salvini_e92be4be-37f0-40c9-a9a1-73fb896cf4d5.html)
the government's budget "won't change" despite pressure from a
widening spread between yields on Italian and German government
debt or the Bank of Italy.
The yield on Italy's 10-year note rose 2.9 basis points to
3.539%, trading more than 3 percentage points above the yield on
the 10-year German government bond, known as the bund .
The selloff in Italian bonds has sharply increased the premium
demanded by investors to hold Italian paper over so-called
risk-free German government bonds. Italy's budget plans, which call
for a deficit of 2.4% of gross domestic product in 2019, have drawn
the ire of European Union officials and raised the threat of a
clash with Brussels over the bloc's fiscal rules.
The International Monetary Fund, in a new study
(http://www.marketwatch.com/story/imf-warns-some-emerging-market-countries-could-face-severely-adverse-capital-outflows-2018-10-09),
said emerging economies will muddle through recent market
turbulence without a severe shock to their financial systems, but
flagged an outside chance of a crisis. The IMF earlier this week
cut its global economic growth forecast
(http://www.marketwatch.com/story/imf-downbeat-on-global-economic-outlook-2018-10-08).
What are analysts saying
"It's not been a particularly good week thus far for European
markets, as concerns about rising yields, and continued
disagreements between the Italian government and EU authorities
undermine investor confidence in the economic and investment
outlook," said Michael Hewson, chief market analyst at CMC Markets,
in a note.
What stocks are moving
Shares of luxury brand LVMH Moët Hennessy Louis Vuitton SE
(LVMUY) sand 3.8% in Paris after a third-quarter sales update. The
company posted quarterly revenue of 11.38 billion euros ($13.06
billion), below analysts' expectations for 11.56 billion euros,
according to Dow Joens Newswires, but also reported a 10% rise in
organic sales compared with a year earlier.
Luxury companies have struggled to overcome worries about
consumption in China and other emerging economies, analysts
said.
Shares of Total SA (TOT) gained 1.8%, buoyed by a continued rise
in oil prices. HSBC Holdings PLC (HSBA.LN) rose 0.9% after it
agreed Tuesday to pay $765 million
(https://www.wsj.com/articles/hsbc-to-pay-765-million-to-settle-mortgage-backed-securities-probe-1539105810?mod=searchresults&page=1&pos=2)
to settle U.S. Justice Department claims it willfully covered up
risks tied to residential mortgages in the run-up to the financial
crisis.
Trading in shares of Patisserie Holdings PLC (CAKE.LN) were
suspended after the company said its board of directors had been
notified of "significant, and potentially fraudulent, accounting
irregularities and therefore a potential material misstatement of
the company's accounts." Patisserie shares are up 21.6%
year-to-date.
(END) Dow Jones Newswires
October 10, 2018 05:39 ET (09:39 GMT)
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