Europe midday: Shares erase early gains as German business morale falls
By Frank Prenesti
Date: Monday 25 Nov 2024
(Sharecast News) - European shares slipped into the red on Monday as German business morale worsened, with bank stocks also in focus after Italy's UniCredit offered to buy rival Banco BPM for around €10bn.
The pan-European Stoxx 600 was down 0.05% at midday, erasing morning gains, to sit at 508 points. Markets had been boosted as investors welcomed US President-elect Donald Trump's decision to appoint billionaire fund manager Scott Bessent as Treasury Secretary.
"Hedge fund manager Scott Bessent is perceived as being a relatively conventional and safe pair of hands candidate and the market gains in Europe following the news were matched in Asia. Importantly, Bessent is seen as being less aggressive on tariffs than some of the rhetoric espoused by Trump on the campaign trail," said AJ Bell investment director Russ Mould.
"A fall in bond yields in response to his unveiling suggests some of the concern about a new wave of inflationary pressures from import tariffs has eased and that Bessent might be able to do something to bring the US deficit under control. He has also spoken in favour of corporate tax cuts - solidifying a part of the new administration's policy agenda which appeals to investors."
Meanwhile, Banco BPM shares gained on the news of a bid, while UniCredit stock fell around 4.2%.
Shares in Commerzbank fell more than 6% after UniCredit said that its offer for Banco BPM was separate from its plans to buy the German lender and that any bid for it would come after Banco BPM had been integrated.
Business morale in Germany worsened this month, with sentiment in both the struggling manufacturing sector and services industries taking a hit, according to the IFO Institute.
The IFO business climate Index, a monthly index based on the responses of around 9,000 private-sector firms, fell to 85.7 in November from 86.5 the month before, coming in shy of the 86.0 consensus forecast.
The index had temporarily rebounded in October after hitting a low of 85.4 in September, which tied its lowest reading in more than four years.
Elsewhere in equities, shares in B&Q owner Kingfisher slumped as the DIY chain operator nudged down the midpoint of its annual profit guidance after a mixed third quarter, in which group like-for-like sales edged lower.
Shares in Norway's Tomra and Envipco - both makers of deposit return systems - surged 10% on reports that the government had not met its plastic bottle collections targets and would have to introduce a deposit system.
Reporting by Frank Prenesti for Sharecast.com
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