Europe midday: Italian shares pare losses despite budget spat with Brussels
Stocks on the other side of the Channel are holding lower but have come off their worst levels of the session, as the selling pressure on Italian government debt eases, even as top European and Italian officials continue to weigh-in on the outlook for the country's finances.
ALPHABET-A
$156.01
13:09 18/04/24
Nasdaq 100
17,394.31
12:15 18/04/24
Ubisoft Entertainment
€21.20
11:00 19/04/24
Commenting on the price action on Tuesday, Markets.com's chief market analyst, Neil Wilson, said: "Markets remain very much on edge following last week's budget proposal [from Rome] for a [public spending] deficit of 2.4%.
"Talk of a fresh crisis seems overblown at present, but it does look as though the EU and the Italian government are set for a major clash that will have far-reaching ramifications for the EU and the Italian economy, even if it does look rather like markets are getting overly twitchy over a couple of percentage points in the deficit."
Be that as it may, as of 1155 BST the benchmark Stoxx 600 was trading lower by 0.70% or 2.71 points at 381.23, alongside a 0.75% or 92.29 point fall for the German Dax to 12,249.7 while Milan's FTSE Mibtel was retreating by 0.62% or 128.12 points to 20,479.70.
In parallel, the yield on the benchmark 10-year Italian government note was higher by five basis points at 3.35%, with that on similarly-dated German debt was down four basis points to 0.44%, leaving the risk premium or difference between both at 286 points.
Earlier, the yield spread between German and Italian bonds hit 300 basis points.
Banks were among the weakest areas of the market, with the Stoxx 600's sector gauge 0.77% lower at 154.42 despite having halved earlier losses.
EU Commission vice-president Valdis Dombrovskis said on Tuesday that Rome could be penalised if it went through with proposals for a deficit-to-GDP target of 2.4% in 2019 and European Central Bank governing council member, Olli Rehn, said Italy's budget plans posed "serious concerns".
For his part, Italian deputy prime minister and leader of the Five Star movement, Luigi di Maio, said the government would not go back "a single millimetre", ANSA reported.
In remarks to RTL 102.5, Di Maio also said he did not believe the Commission's criticism was "a plot" but added that they "must not give blows below the belt".
Euro/dollar meanwhile was slipping 0.41% to 1.15303.
At Monday evening's so-called Eurogroup meeting, several finance ministers raised concerns around Italy's proposed budget deficit target of 2.4% of gross domestic product for 2019 announced on 28 September.
On a related note, earlier on Monday, the economic head of Italy's League party, Claudio Borghi, said in a radio interview that his country would be better outside of the euro.
Also on Monday evening, the US Navy accused China's military of "unsafe and unprofessional" behaviour at the weekend around one of the reefs occupied by the Asian giant in the South China Sea.
Against that backdrop, both Asian stock markets and emerging market currencies saw selling pressure overnight, with Hong Kong's Hang Seng erasing 2.38% to 27,126.38 and Indonesia's rupiah falling past the 25,000 mark for the first time since 1998.
On the economic front, Eurostat reported that a 0.9% month-on-month rise in energy costs had pushed factory gate prices in the single currency bloc up by 0.3% month-on-month and 4.3% year-on-year in August (consensus: 3.8%).
Excluding energy prices, wholesale inflation in slowed from a 1.7% clip year-on-year in July to 1.5% for August.
Meanwhile, in Ireland, CSO reported that the rate of unemployment declined from 5.6% in August to 5.4% for September.
Later in the session, US Federal Reserve vice-chairman Randal Quarles was set to testify before a Senate committee with his boss, Jerome Powell, set to deliver a speech a few hours afterwards.
Ubisoft shares were on the up after Google said it would partner with it test its video game streaming service.
BMW was higher too despite a warning from its chief, Harald Krueger, that a hard Brexit would leave it with no option but to ramp-up production of Minis in the Netherlands.
Speaking at the Paris Motor show, Krueger reportedly put the odds of a 'no deal' Brexit at 50:50.
Akzo Nobel on the other hand had given up early gains, earlier the paint-maker had said it would return €5.5bn to shareholders following the sale of its speciality chemicals unit.
Farther afield, reports were that Australia's Latitude Financial, which was part-owned by Deutsche Bank, had decided to postpone an initial public offering, partly on account of market conditions.