By Dave Morris
Italian banks were hit as continuing anxiety over the country’s euroskeptic party’s success in European elections sent sovereign bond yields surging.
How did markets perform?
The Stoxx 600 (STOXX:XX:SXXP) fell 0.3% to 376.1 giving back Monday’s gains of 0.2%.
The U.K.’s FTSE 100 (FTSE:UK:UKX) was nearly flat at 7,280.7, after being closed Monday.
The pound (XTUP:GBPUSD) dipped 0.1% to $1.2658, in addition to edging down 0.1% Monday.
In Germany, the DAX (XEX:DX:DAX) (NAS:DAX) was down 0.3%, sinking to 12,038.7. On Monday it rose 0.5%.
France’s CAC 40 (PAR:FR:PX1) retreated 0.4% to 5,315.8, handing over all of Monday’s 0.4% rise.
Italy’s FTSE MIB (BORSA:IT:I945) slipped to 20,210.4, down 0.8% in addition to the 0.1% fall Monday.
What’s moving the markets?
Italian banks were stung by the latest from Brussels following the European election results Sunday, where right-wing anti-Euro party Lega Nord topped the polls with 34.3% of the vote. With a clash looming among Italian deputy Prime Minister Matteo Salvini and the European Council over budgetary restraint, the spread among Italian and benchmark German 10-year government bonds shot to 2.88.
Bloomberg reported that , in a press conference during a state visit to Japan, U.S. President Donald Trump described the current state of trade negotiations with China saying: “They would like to make a deal. We’re not ready to make a deal.” He added that U.S. tariffs on Chinese products could go up “very substantially”.
German and French economic data was a tale of two European consumers. It was the best of times in France, where May’s consumer confidence data leapt ahead to 99 on the strength of President Emmanuel Macron’s tax cuts. In Germany, however, June consumer sentiment came in at 10.1 points, lower than the 10.5 expected.
Which stocks are active?
The spike in Italian 10-year government bond yields, which raises the cost for Italian banks, sent some of their shares tumbling. UniCredit SpA (MIL:IT:UCG) declined 2.6%, Unione di Banche Italiane SpA (MIL:IT:UBI) fell 2.6% and FinecoBank SpA (MIL:IT:FBK) dipped 3.6%.
A Goldman Sachs report on Rio Tinto PLC (LON:UK:RIO) sent shares up 3.1%. Analysts upgraded the miner to a buy on expectations of increased demand for iron ore, particularly after the Vale dam disaster which hurt global production of the commodity.
NMC Health PLC (LON:UK:NMC) shares shot up 3.9% as the company upgraded its earnings forecast for 2019. The health-care provider said it sees changes to accounting standards leading to higher earnings before interest, taxes, amortization and depreciation of between $665 million and $675 million.
AstraZeneca PLC (LON:UK:AZN) shares were down 1.3%, after a report in The Wall Street Journal indicated that the company’s new cancer research chief wanted to take the bold yet unorthodox approach of pursuing drugs targeting early stages of the disease rather than later ones. The stock price has been noticeably volatile in the past 12 months, but has been broadly increasing.