Eurozone stock markets tentatively rose yesterday, buoyed by resilient German post-Brexit business sentiment, as traders await Japanese and US central bank talks for possible hints of future action.
Frankfurt’s benchmark DAX 30 index grew 0.5% in value after a key survey showed that Britain’s vote to leave the European Union has had a limited impact on business confidence in Germany.
It was the first time pollsters had taken the pulse of Europe’s biggest economy since the shock outcome of Britain’s June 23 referendum.
Paris’ CAC 40 lost some of its earlier momentum to close moderately higher.
“The week begins with returned caution” due to both Brexit concerns and key central bankers meetings and data on the horizon, IG France analyst Alexandre Baradez said.
Meanwhile, London’s FTSE 100 slipped 0.3% at 6,710.13 points, led downwards by oil companies as prices fell.
“The main drag this afternoon seems to be coming from the commodity sector; Brent Crude has fallen nearly 2%, taking the black stuff back below $45 per barrel,” Spreadex analyst Connor Campbell in an investors’ note.
In Italy, shares in the country’s third biggest bank, BMPS, slumped more than 8% ahead of Friday’s release of EU-wide stress tests as the bank weighs how to curb €9.6bn of bad loans by 2018.
Citing unnamed sources, Il Sole 24 Ore business daily said BMPS was the only one of Italy’s five banks to undergo the European banking Authority testing to have failed to receive good results.
US shares flagged in early trade as investors took in the long-expected deal for Verizon Communications to buy the web assets of troubled tech giant Yahoo for $4.8bn.
Oil super-majors Chevron, Exxon Mobil and Royal Dutch Shell saw their share prices decline as the industry continues to feel the effects of global oversupply.
Traders are cautiously looking to the US Federal Reserve’s gathering tomorrow, followed by the bank of Japan on Friday.
The meetings are the first since the shock outcome of Britain’s EU vote which led to promises around the world to provide support to financial markets.
Oanda’s Craig Erlam said the Fed was likely to stand pat.
“The US economy has continued to perform well and the labour market bounced back strongly in June which may lead the Fed to reaffirm its intention to raise interest rates this year, while highlighting the number of downside risks to their forecasts,” he said in an investors’ note.