European markets lose momentum

European stocks closed slightly lower on Tuesday, their third out of four sessions in the red, as caution around interest rate reductions dominated, with investors waiting for economic data due later in the week.

The pan-European Stoxx 600 index ended 0.2 per cent lower after hitting a one-week low earlier in the session, with banks and luxury stocks leading sectoral losses, down around 0.9 per cent each.

The lender-heavy Italian share index lagged regional peers, dropping 0.6 per cent to hit a more than one-week low.

The Stoxx index has eased from record highs since European Central Bank policymakers cautioned against expecting successive interest rate reductions in June and July.

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Traders anticipate cuts worth 66 basis points from the ECB by year-end, according to the LSEG rate probabilities app, with the first seen in June.

Dublin

AIB and Bank of Ireland remained in positive territory despite the softening of investor sentiment. The lenders fall by 1 per cent and 0.8 per cent respectively.

Rival Permanent TSB, however, fell by 0.7 per cent to €1.49. Iseq heavyweights Ryanair, Kingspan and Smurfit Kappa also lost ground, closing the session down by 0.5 per cent, 0.8 per cent and 0.2 per cent respectively.

Shares in Dublin-based convenience foods group Greencore soared by almost 19 per cent on Tuesday after the company published half-year results slightly in advance of forecasts and announced a £50 million (€58.5m) return for shareholders via buy-backs and dividends.

London

The FTSE 100 nudged downwards as a broader sell-off reached European stocks after falls in Asia. Global markets continued with their cautious tone this week, with BT, Vodafone and EasyJet among the biggest fallers on the UK index.

The FTSE 100 finished 8 points, or 0.09 per cent, lower at the close at 8,416 points.

In company news AstraZeneca shares rose after it announced it planned to double profits to £62.8 billion by 2030. The FTSE’s most valuable company will launch 20 new medicines over coming years in areas like cancer care and rare diseases as part of a “new era of growth”. Chief executive Pascal Soriot said many of the new products have potential to generate more than five billion dollars a year and “transform millions of lives”.

Shares were up 2 per cent at the close. Utilities company Pennon’s shares fell after it said it was “100 per cent focused” on returning a safe water supply to those affected by a parasite outbreak in Devon. Shares fell 5 per cent despite it revealing higher annual earnings and an increased dividend for investors.

Europe

Italy’s top insurer Generali dipped 1.5 per cent after reporting first-quarter results, with some analysts pointing to lower-than-expected profitability in the property and casualty business.

The energy contractor Saipem rose 4 per cent after securing $3.7 billion in contracts with a subsidiary of French oil big TotalEnergies.

Swiss fastening systems maker SFS Group climbed 8 per cent after UBS upgraded the stock to “buy” from “neutral”.

Euro zone negotiated wage data for the first quarter along with May manufacturing data expected on Thursday could shed light on the state of the economy and offer clues to the trajectory of interest rates.

“Euro zone productivity is weak, so the bulk of the increase in labour costs over Q1 most likely reflects higher employee compensation. Elevated euro zone wage pressures suggest easing the cycle will be shallow,” said Win Thin, global head of markets strategy at Brown Brothers Harriman.

New York

The main US indexes oscillated within a tight range on Tuesday as investors grew cautious in advance of AI chip leader Nvidia’s earnings this week and Federal Reserve officials emphasised the central bank was in no hurry to ease interest rates.

Nvidia, Wall Street’s third most valuable firm, will report quarterly earnings on Wednesday in what is likely to be a significant market trigger and a litmus test for the success of the generative AI boom.

“For investors to drive Nvidia shares even higher they’re going to be looking for some very aggressive forward numbers that keeps them feeling that the stock could continue on its upward climb,” said Rick Meckler, partner at Cherry Lane Investments.

Data from options analytics firm Trade Alert showed Nvidia’s options are primed for an 8.7 per cent swing, or $200 billion in market cap, in either direction by Friday.

Investors also awaited minutes from the Federal Reserve’s last policy meeting, due on Wednesday, with two rate-setters on Tuesday saying it was prudent to wait several more months to ensure inflation really is back on a path to the 2 per cent target before commencing rate cuts. – Additional reporting by Reuters

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