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Anemic gains in Euro markets – Uniper’s wild 30% plunge

In positive territory but with marginal gains, the main European indices finished the last trades of the week, as investors assimilated the decisions of the ECB.

In particular, the pan-European Stoxx 600 closed up 0.3% at 425.7 points, with the travel and leisure sector jumping 2.4% while the rest moved mostly lower.

Besides, in this climate, Mr Stoxx 50 of high capitalization closed essentially unchanged at 3,596 units.

In the rest of the European boards, the German one DAX imperceptibly strengthened by 0.05% to 13,253 units, the British FTSE 100 by just 0.08% to 7,276 units and the French CAC 40 by 0.25% to close at 6,216 units.

In the periphery, the Spanish IBEX 35 added 0.5% ending at 8,051 units, while the Italian FTSE MIB ended with a marginal increase of 0.07% at 21,211 points.

Yesterday, the ECB announced the first increase in interest rates in 11 years, by 50 basis points in fact, while also approving the new safety tool for government bond spreads, the TPI (Transmission Protection Instrument).

Although the aggressive 50 basis point hike was an “underdog” in the market, many fear that the ECB has been characteristically slow to tighten its policy and therefore the hike in question will not make a difference.

The landscape regarding the TPI is even more clouded, as analysts estimate that the ECB’s announcements lacked clarity and, more generally, that the terms of the new program are not clear.

At the same time, fears of an impending recession in the eurozone are intensifying, as private sector activity in the region unexpectedly contracted for the first time since the pandemic lockdowns in early 2021, PMI data showed today.

“A sharp decline in new orders, a shrinking backlog and bleak business expectations suggest the pace of the slowdown is gaining further momentum,” said Chris Williamson, chief economist at S&P Global, which compiles the index.

“The biggest concern is the plight of manufacturing, with producers reporting that weaker sales have led to an unprecedented increase in inventories,” he added.

At the same time, the eurozone’s third-largest economy, Italy, has been plunged into anarchy after the collapse of the Draghi government, with President Mattarella calling elections for September 25.

In share moves, gas operator Uniper after a two-day rally today took a wild plunge of 30.5% after it was revealed that it received 15 billion euros in guarantees and shares today as part of the German government bailout.

Conversely, Sweden’s Sinch topped the Stoxx 600 with a 14% rally, paring Thursday’s losses in the wake of its CEO’s resignation.

Source: Capital

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