European stock markets extended losses on Wednesday following the worst session for a month.
The benchmark Stoxx 600 was down 0.44% in early deals, with oil and gas stocks up 0.64% as the lone sector in the green while travel fell 1.1%.
International Distribution Services, owner of Britain’s Royal Mail, rose 3% after accepting a 3.57 billion pound ($4.56 billion) takeover deal from Czech billionaire Daniel Kretinsky. Mining giant Anglo American slipped 1.5% after BHP Group, which has put in a takeover bid for the company, said it needed more time for talks.
The Stoxx dropped 0.6% on Tuesday, its steepest loss since April 30, as investors focus on the interest rate outlook and monitor rising global bond yields.
A solid crop of first-quarter and full-year earnings has put the index on course for a monthly gain.
“Earnings season was generally better than feared,” Marcus Morris-Eyton, portfolio manager for Europe and global growth at AllianceBernstein, told CNBC’s “Squawk Box Europe” on Tuesday.
“51% of companies beat expectations, but actually two thirds of companies beat or met expectations, and when you dig beneath the surface what is particularly interesting is the margin strength across European companies during the quarter,” Morris-Eyton said.
“What that’s indicative of is that companies are so far managing to hold on to many of the price increases they pushed through during that Covid period, so as inflationary pressures are reducing, companies are holding on to those pricing gains that are benefiting the margin line,” he added.
However, as the flow of earnings has dried up, attention has shifted back to the plans of the world’s major central banks as they express caution over the inflationary outlook.
Minneapolis Federal Reserve President Neel Kashkari told CNBC on Tuesday it would take “many more months of positive inflation data” to give him confidence it is time to cut rates.
European Central Bank Governing Council member Klaas Knot meanwhile said in a London speech that it will “soon” be appropriate to move toward less restrictive monetary policy, but that easing must go “slowly” and “gradually” from there.
Inflation data is due from both the euro zone and U.S. on Friday.
Asia-Pacific markets were mostly lower on Wednesday, while U.S. stock futures were little changed.
Europe stocks open lower
European stocks opened lower on Wednesday, with the Stoxx 600 index 0.2% lower at 8:22 a.m. in London.
France’s CAC 40 index fell 0.35%, Germany’s DAX dipped 0.2%, and the U.K.’s FTSE 100 was just below the flatline.
Stoxx 600 index.
— Jenni Reid
BHP Group requests extension to $49 billion Anglo American takeover talks
Chris Ratcliffe | Bloomberg | Getty Images
BHP Group on Wednesday said it believes an extension to talks with takeover target Anglo American is necessary, as the deadline for discussions looms later in the session.
The Australian miner said in a statement that it had proposed a number of “socioeconomic measures” to address concerns over its bid, but added that more time was needed to discussions.
The offer values the company at £38.6 billion ($49.2 billion), according to previous Reuters calculations.
Read more here.
— Karen Gilchrist
CNBC Pro: Can Nvidia’s astronomical growth last? Outperforming long-time growth investor weighs in
For many investors, the million-dollar question is how far Nvidia can go or whether it can sustain its dramatic growth.
Nick Griffin, chief investment officer at Munro Partners, has invested in Nvidia since 2019 – but even he is taken aback by the stock’s astronomical run so far.
“I have never seen anything like this in terms of the dramatic earnings acceleration it’s displaying … it’s never happened before to a company of this size, and it’s unprecedented,” he said Tuesday.
CNBC Pro subscribers can read more here.
— Weizhen Tan
CNBC Pro: Morgan Stanley names global stocks to ride the Nvidia boom — and gives 4 over 50% upside
Investor darling Nvidia is dominating headlines once again after its earnings last week surpassed expectations on the back of the artificial intelligence boom.
Morgan Stanley notes that the reaction to Nvidia’s first quarter results is “very telling on how much buying power still exists in the market.”
“We are far from topping out on AI. This should be enough to sustain investor confidence in AI supply chain stocks in Asia,” the investment bank’s analysts wrote in a May 22 research note.
They named a number of overweight-rated stocks to play their favorite AI themes, including four with over 50% upside potential.
CNBC Pro subscribers can read more here.
— Amala Balakrishner
Europe stocks head for lower open
European stock markets are set to open lower on Wednesday, according to IG data.
The U.K.’s FTSE 100 was seen opening lower by 37.3 points at 8,225, France’s CAC 40 lower by 35 points at 8,019, and Germany’s DAX lower by 73 points at 18,614.
— Jenni Reid
‘Many more months’ of positive data needed before rate cuts, Fed’s Kashkari says
Minneapolis Federal Reserve President Neel Kashkari told CNBC on Tuesday he is still not ready to cut interest rates.
“Many more months of positive inflation data, I think, to give me confidence that it’s appropriate to dial back,” he said. He also noted the central bank could raise rates if inflation does not continue to ease. “I don’t think we should rule anything out at this point.”
— Fred Imbert
ECB’s Knot says monetary policy to ease ‘soon’ — but slowly
European Central Bank Governing Council member Klaas Knot said Tuesday it will “soon” be appropriate to move toward less restrictive monetary policy, but that easing must go “slowly” and “gradually” from there.
Knot, head of the central bank of the Netherlands, said during a speech in London that he has “increasing confidence inflation will return to target in a timely manner.”
“Rates will slowly but gradually move into less restrictive levels,” he said.
Markets are betting on a June interest rate cut from the ECB following firm signaling from policymakers, with just one further cut this year.
“The precise timing, speed and scale of easing will have to follow a data-dependent approach, with our projections and the labor market being a key ingredient,” Knot said.
Recent data suggests wage growth will remain “bumpy” this year, Knot added, meaning the next round of ECB projections on growth and inflation in June will be crucial for determining the path ahead.
— Jenni Reid
Nasdaq eclipses 17,000 for first time
The Nasdaq Composite touched a new record in Tuesday’s session. At one point, the tech-heavy index surpassed the 17,000 mark for the first time ever.
It comes near the end of a strong month, with the index rising more than 8% so far in May.
Nasdaq Composite, 1-day
— Alex Harring
