Euromarkets: In search of direction with an eye on Fed and results

LAST UPDATE: 12.00

Europe’s major markets were little changed and mixed on Monday as investors braced for a barrage of corporate results this week and the US Federal Reserve’s decision to raise interest rates.

Its two-day monetary policy meeting Fed will conclude on Wednesday, with economists expecting a rate hike of 75 basis points. Last week, the European Central Bank opened its own hike cycle with a move to 50 basis points.

The ECB may have to agree a moderate recession in order to control inflationary pressures on pricesif it sees signs that inflation expectations are strongly rising, pointed out Robert Holzmannmember of the Bank’s Board of Directors, in an interview with the Austrian state broadcaster ORF.

“We hope that this will not become necessary,” Holzmann added. to note that the size of the rate hike in September will depend on developments in the economic outlook.

Market players “weigh” the impact of interest rate hikes in terms of ECB in economic output in the eurozone. ECB President Christine Lagarde has pledged that European central bankers will continue to raise interest rates until they achieve their goal of returning inflation close to the 2% target.

In the field of results, Ryanair announced that it showed a net profit for the first quarter of the year but they came in below estimates, adding that it had limited visibility for the second quarter and almost no visibility in the second half. The Dutch medical equipment company Philips, reported a higher-than-expected second-quarter profit drop, stating that supply shortages and lockdowns in China reduced sales. Vodafone Group announced that the its performance in the first quarter of fiscal year 2023 was in line with expectationsfollowing continued growth in Europe and Africa, while the Julius Baer Gruppe announced lower profits for the first half of 2022, mainly due to slowing customer activity and volatile markets.

Corporate results will be a key driver of financial markets this week, as a new round of announcements is expected, with UBS, Unilever, LVMH, Credit Suisse, Deutsche Bank, Daimler, Shell, Barclays, Nestle and Renault standing out.

In this climate, the pan-European index Stoxx 600 is down 0.05% at 425 points, with oil and gas stocks the biggest losers down 1.2%.

In the individual boards, the German DAX loses 0.1% to 13,240 units, the French CAC 40 the British also marginally strengthens to 6,220 units FTSE 100 remains almost unchanged at 7,275 points.

In the periphery, the Italian FTSE MIB and the Spanish registers gains of 0.2% at 21,255 points IBEX 35 adds 0.3% to 8,075 points.

In the individual sharesVerbund gains 3.3% after Barclays upgraded its stock to “overweight”.

In contrast, Philips tumbled 9%, with the Dutch company downgrading its earnings outlook for the year and medium term.

At the end of the day, business confidence in Germany deteriorated sharply in July as businesses became more pessimistic due to rising energy costs and the threat of natural gas shortages. The Ifo business climate index fell to 88.6 points in July from a revised figure of 92.2 points in June, according to data from the Ifo Institute.

They move downwards at the beginning of the week stock markets in the Asia-Pacific region as well with technology dragging markets into negative territory. The biggest losers in Hong Kong were Hang Seng Tech, down 2%.