European shares erase gains on luxury, consumer staples drag; UBS glows
Reuters
Published Aug 31, 2023 08:28
Updated Aug 31, 2023 17:35
By Ankika Biswas and Shashwat Chauhan
(Reuters) -European shares were flat on Thursday as declines in consumer staples and luxury stocks outweighed gains in real estate and financials including UBS, while a raft of economic data gave a mixed picture of the euro zone.
The pan-European STOXX 600 closed 0.2% lower, having risen as much as 0.5% intraday.
Recent gains have helped the benchmark stave off its worst monthly performance so far this year, but it is still set to log a decline of nearly 3%.
Swiss bank UBS Group jumped 6.1%, hitting its highest level since 2008, on a sweeping plan to cut over $10 billion in costs, axing 3,000 jobs in Switzerland after taking over its stricken rival Credit Suisse (SIX:CSGN).
The broader financial services index added 1.5%, hitting a one-month high.
Rate-sensitive real estate stocks gained 1.6%, while euro zone bond yields fell to a one-week low after data on the bloc's inflation revealed a mixed picture.
Euro zone inflation held steady this month while underlying price growth fell as expected, but remained above the ECB's target, while past data on business activity have pointed to a darkening economic outlook.
"We may be past the peak in core services inflation as pressure from tourism-related sectors subsides and as favourable base effects from travel subsidies take effect...," said Gurpreet Gill, macro strategist, global fixed income at Goldman Sachs (NYSE:GS) Asset Management.
"If policymakers pass on a 10th consecutive rate rise in September, whether they choose to lift rates in October, to a 4% terminal rate, will depend on the trajectory of inflation between now and then."
ECB policymakers kept a September hike on the table while raising rates in July, although some of them argued that another move would be deemed unnecessary when new economic projections were released, accounts of the meeting showed.
For the first time in over a year, traders are struggling to gauge whether a rate hike is likely in September.
Among major data points, separate readings from Germany showed August unemployment rose more than expected, while July retail sales fell unexpectedly.
Germany's DAX, however, rose 0.4%, outperforming major regional peers.
Luxury was the worst hit sector, down 1.3%.
Get The App
Pernod Ricard (EPA:PERP), owner of Mumm champagne and Absolut vodka, dropped 6.7% on warning that sales would decline in the Chinese and U.S. markets in its first quarter to Sept. 30, steering a 1% decline in the food and beverages sector.
Glencore (LON:GLEN) dropped 2.5% after a Financial Times report showed dozens of asset managers accused the miner of lying in past share prospectuses.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.