(Paris) Markets are trading in the red on Tuesday, hurt by weaker than expected Chinese economic data and sharp declines in the banking sector.
The Milan Stock Exchange in particular fell 2.12%, its worst session in a month, due to the tumble of its banking stocks after the Italian government announced a 40% tax on “surplus profits of billions” from banks to offset the cost to households and businesses of soaring interest rates.
Paris lost 0.69%, London 0.36% and Frankfurt 1.10%.
Wall Street opened lower: the Dow Jones was down 1%, the tech-heavy NASDAQ was down 1.53% and the broader S index
The publication of a much stronger than expected contraction in China’s exports and imports in July reduced investor confidence in the global economic outlook.
The numbers underscored “remaining weak domestic demand and additional economic challenges in the third quarter,” according to Michael Hewson of CMC Markets.
This observation was felt in the bond market, where interest rates are falling sharply, a drop to “associate with worse macroeconomic figures”, according to Alexandre Baradez, analyst at IG France.
The yield on the German 10-year government bond stood at 2.47% around 11:55 a.m. (ET), down from 2.59% at the close the previous day. French at the same maturity was at 3% against 3.13%. In the United States, the ten-year rate was 4.01% compared to 4.09%.
A US central bank official, Patrick Harker, said interest rates could remain stable at the next meeting in September if the economy maintains its trajectory.
Bank stocks fell in Milan. Monte dei Paschi fell by 10.83%, BPER by 10.94%, Intesa Sanpaolo by 8.67%, Banco BPM by 9.09% and Unicredit by 5.94%.
In Frankfurt, Commerzbank lost 3.34%. In Paris, BNP Paribas dropped 3.01% and Crédit Agricole 2.46%, the two French banks being well established in Italy.
In New York, it was a warning from ratings agency Moody’s that unsettled investors. It lowered the rating of a dozen small American banks on Monday evening, citing risks associated with their exposure to commercial real estate. Several large banks are also placed under surveillance by the rating agency, including Bank of N. Y. Mellon and State Street.
However, for Alexandre Baradez, analyst of IG France, the Moody’s report “is not likely to generate a wind of panic on the banking sector”.
On Wall Street, BNY Mellon fell 2.34%, US Bancorp 2.47%, Citizen Financial 3.65% and State Street 2.69%, and M
Investment company Abrn fell 11.67% in London after publishing its half-year results showing lower operating profit and lower capital under management.
Eli Lilly shares soared 17.06% in New York after the pharmaceutical company raised its full-year guidance and posted better-than-expected quarterly earnings.
Crude prices fell slightly around 11:50 a.m. A barrel of Brent from the North Sea, for delivery in October, lost 0.26% to 85.15 dollars.
Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery in September, dropped 0.17% to 81.78 dollars.
On the foreign exchange market, the dollar rose 0.36% to 1.0950 dollars for one euro.
Bitcoin was up 1.42% at $29,570.