Euro Stocks: Early decline in European stocks due to BoE and Russian attacks keeps market gloomy

Oct 11, 2022
VOT Research Desk

Key News – Insights and Analysis

The Market Perspective:

After the Bank of England stated that the ongoing crisis in the UK’s pension fund sector posed a “material risk to U.K. financial stability,” European stock markets opened lower on Tuesday for the fifth consecutive session.

After the indiscriminate wave of Russian missile strikes on Monday appeared to point to another escalation of Russia’s war, reports of fresh air raid warnings in Ukraine added to the grim mood.

The benchmark Stoxx 600 was down 2 points, or 0.5 percent, at 388.14, while the Eurozone Stoxx 50 was down 0.4 percent as of 03:45 ET (07:45 GMT).Russia’s RTS lost the most money among national markets, falling another 1.5% after losing 12% in a week. The FTSE 100 was down 0.7 percent in western Europe, while the FTSE 250 midcap index, which is focused on the UK, was down 0.6 percent. The DAX index in Germany decreased by 0.6%, while the FTSE MIB 40 index decreased by 1.4%.

Reports that the German government had shifted its position to support the issuance of EU debt to help fund the bloc’s response to the natural gas crisis this winter received little support from European markets. The benchmark front-month Dutch TTF contract increased by nearly 5% to 168.14 euros per megawatt hour as a result of this news.

After the Bank of England issued a warning regarding the bond market and the issues posed by pension funds that engage in “liability-driven investing,” a strategy that requires them to liquidate holdings of safe assets in order to provide more margin on long-dated interest rate derivatives, banks performed poorly across the continent.

Banco Bpm SpA (BIT:) was the worst performing Italian bank, which is always sensitive to sharp increases in market interest rates. BAMI) decreased by 4.9%, while Unicredit (BIT:CRDI) was 2.9% lower.ETR: Deutsche BankCommerzbank (ETR: DBKGn) CBKG) also decreased by 3.0%.

Industries with a defensive focus did slightly better, with brewing giant Carlsberg (CSE: Both Heineken (AS: CARLb) andHEIN) increasing 1.0 percent and 0.5 percent, respectively, and Unilever (LON: Imperial Brands (LON: ULVR) saw its stock rise by 0.5 percent.IMB) increased 0.4%, supported by the buyback announcement made last week.

The market is now bracing for the third-quarter earnings season, which begins for Europe with the release of LVMH (EPA: Givaudan and LVMH (SIX:GIVN) outcomes following the close. On Friday, the real earnings season in the United States begins.

ANALYTIC INDICATORS (Daily)

FTSE100

CAC 40

DAX