European shares slip on US debt ceiling concerns
Reuters
Published May 17, 2023 08:37
Updated May 17, 2023 17:27
By Sruthi Shankar and Ankika Biswas
(Reuters) -European shares slipped on Wednesday as concerns about whether the United States can avoid a debt default weighed on sentiment, along with a slew of downbeat corporate updates.
The continent-wide STOXX 600 eased 0.2%, with defensive sectors such as food and beverage, utilities and real estate firms leading declines.
A cautious mood prevailed in global markets as U.S. President Joe Biden looked set to continue talks with congressional leaders on raising the country's debt limit later this week, with House Speaker Kevin McCarthy vowing to avoid a default.
"We're still a little way off from the deadline and there are hopes that we could get some kind of deal over the weekend," said Chris Beauchamp, chief market analyst at IG Group.
"It will affect U.S. markets first and European markets will go with it, and that's how we expect the second half of May to play out. It's never a great month for stocks."
European shares have traded in a tight range this month as investors assess the outlook for European and U.S. interest rates and the risk of a U.S. default.
German lender Commerzbank AG (ETR:CBKG) fell 3.8% on Wednesday after its net interest income forecast for the full year fell short of analysts' expectations.
Euronext NV dropped 3.0% after the stock exchange operator reported a fall in first-quarter revenue and income, while London Stock Exchange Group (LON:LSEG) was down 2.7% after an investor consortium including U.S. buyout firm Blackstone (NYSE:BX) and Thomson Reuters sold shares worth about 2.7 billion pounds ($3.41 billion).
UBS Group AG (SIX:UBSG) rose 1.1% after the Swiss bank said it expects a financial hit of about $17 billion from the takeover of Credit Suisse (SIX:CSGN) Group AG but also estimated a one-off gain from so-called "negative goodwill" of $34.8 billion.
"While this is slightly smaller than some industry estimates, it's a heavy cost to bear, said Susannah Streeter, head of money and markets at Hargreaves Lansdown (LON:HRGV) about the $17 billion hit.
"(It) has been partly put down to the lack of time it was able to complete due diligence and assess the web of problems at Credit Suisse," she added.
Boosting Germany's DAX, Siemens AG (ETR:SIEGn) climbed 2.6% after the engineering and technology group raised its full-year sales and profit guidance, while business software maker SAP added 0.8% after raising its 2025 total revenue outlook and announcing a share buyback of up to 5 billion euros.
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French catering group Elior slumped 22.8% after lowering its margin forecast on likely lower sales growth and high inflation.
Thyssenkrupp (ETR:TKAG) jumped 6.8% after Bloomberg News reported the German submarine-to-steel group is planning to launch an IPO of its hydrogen business Nucera next month.
Written By: Reuters
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