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Markets fell Tuesday as concerns over the health of the US banking sector played out on Wall Street and an Italian windfall tax on lenders saw European bank shares plummet. bulletin news
The dollar continued to rise from talk of yet another US interest rate hike, while oil prices retreated following weak Chinese trade data and a lack of growth in US trade figures.
In Milan, share prices of Italian banks Intesa Sanpaolo to Unicredit and Monte dei Paschi di Siena lost between seven and 10.2 percent on news of the windfall tax, adopted by Prime Minister Giorgia Meloni’s ministers late Monday.
Fallout spread to French and German banks, with Credit Agricole down 3.8 percent in afternoon trade in Paris and Commerzbank losing 4.87 percent in Frankfurt.
The Italian government was “using part of the banks’ billion-dollar profits to help families and businesses affected by rising interest rates”, Deputy Prime Minister Matteo Salvini said on X, formerly known as Twitter.
Banks were also “under pressure across Europe after Moody’s cut its credit ratings on 10 small to mid-sized US banks”, noted Victoria Scholar, head of investment at Interactive Investor.
And it “warned it may do the same for some of the larger lenders such as BNY Mellon and State Street which have been placed on review for a possible downgrade”, she added.
Asia’s major stock markets were mixed amid concerns that the Federal Reserve would hike rates again, while another weak batch of trade data compounded worries about the struggling Chinese economy.
The positive sentiment that fuelled a rally for stock markets through much of July has given way to nervousness that while US inflation is coming down, officials will keep tightening monetary policy to make sure they have prices under control.
Analysts also warned that while the US economy remained in rude health after more than a year of rate hikes, fears of recession remained.
The US trade deficit narrowed in June to $65.5 billion, compared with $68.3 billion in May, on a bigger pullback in imports than exports, according to government data released on Tuesday.
“A weaker trend could persist owing to the effects of monetary policy tightening globally, which is likely to slow demand and economic activity domestically and abroad,” said economist Rubeela Farooqi of High Frequency Economics.
On the disappointing trade outcome, analyst Patrick O’Hare of Page One noted: “One can see the growth worries in the commodities market.”
West Texas Intermediate was down at $80.81 per barrel, as was Brent North Sea crude to $84.22 per barrel following Wall Street opening.
The market’s focus will turn to the release of US consumer price inflation later in the week.
Key figures around 1330 GMT
New York – Dow: DOWN 0.9 percent at 35,145.55 points
London – FTSE 100: DOWN 0.5 percent at 7,517.46
Frankfurt – DAX: DOWN 1.1 percent at 15,768.90
Paris – CAC 40: DOWN 0.9 percent at 7,251.23
EURO STOXX 50: DOWN 1.3 percent at 4,280.31
Tokyo – Nikkei 225: UP 0.4 percent at 32,377.29 (close)
Hong Kong – Hang Seng Index: DOWN 1.8 percent at 19,184.17 (close)
Shanghai – Composite: DOWN 0.3 percent at 3,260.62 (close)
Euro/dollar: DOWN at $1.0945 from $1.1006 on Monday
Pound/dollar: DOWN at $1.2701 from $1.2783
Euro/pound: UP at 86.16 from 86.07 pence
Dollar/yen: UP at 143.13 yen from 142.47 yen
West Texas Intermediate: DOWN 1.1 percent at $80.81 per barrel
Brent North Sea crude: DOWN 1.1 percent at $84.22 per barrel
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