👀 Ones to watch: Undervalued stocks to buy before they report Q3 earningsSee Undervalued Stocks

Banks, energy stocks weigh on European bourses; BMW tumbles

Published 2024/09/10, 18:58
Updated 2024/09/10, 19:10
© Reuters. The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, September 9, 2024.     REUTERS/Staff/File Photo
DBKGn
-
CONG
-
CBKG
-
BMWG
-
LCO
-
STOXX
-

By Pranav Kashyap and Lisa Pauline Mattackal

(Reuters) -European equity markets largely lost ground on Tuesday, weighed by bank and energy stocks as investors tread cautiously ahead of key U.S. inflation data and an anticipated European Central Bank rate cut later in the week.

Shares of automaker BMW (ETR:BMWG) slumped 11%, notching their worst day in over four years after the company cut its 2024 profit margin outlook due to sluggish demand in its key Chinese market and problems related to a braking system supplied by Continental.

Continental shares dropped 10.5%.

"With China only getting tougher and BMW overexposed to China, and with H2 recovery expectations looking a bit optimistic, it remains tough to see the positive catalyst for BMW," Citi analysts wrote in a note.

Bank stocks also fell sharply, tracking a selloff in U.S. lenders with analysts citing downbeat comments from Goldman Sachs CEO David Solomon.

Deustche Bank >DBKGn.DE> dropped 4.91%, and a European index tracking bank stocks lost 1.6%.

The oil and gas sector also fell 1.6% as Brent crude prices slipped below $70 per barrel for the first time since December 2021.

The pan-European STOXX 600 index fell 0.5%, reversing gains from earlier in the day, with the automobile sector down 3.8% and German stocks falling nearly 1%.

Markets were uneasy ahead of Wednesday's U.S. inflation report, which could provide clarity on the size of the Federal Reserve's rate cut when it meets next week.

The path for interest rates and economic growth in the world's largest economy has largely set the tone for global markets over the past months.

In Europe, the ECB meets on Thursday and markets have fully priced in a 25 basis-point rate cut, though the policy path for the rest of this year remains more uncertain.

"The question for markets is what happens next," analysts at ING said.

"(The ECB) downplaying the chance of an October cut and confining itself to quarterly steps on rates – at least for now – should act as a brake on the potential pace of easing."

The rate-sensitive real estate sector was one of the few gainers on the STOXX 600 index, rising 1.7%.

On the economic front, data showed German inflation slowed to 2% in August.

© Reuters. The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, September 9, 2024.     REUTERS/Staff/File Photo

Among individual movers, Commerzbank (ETR:CBKG) closed down 2.4% as the German government began to sell some of its shares, as previously announced. CEO Manfred Knof also said he would not seek another term after his contract ends in 2025.

Heavy-weight AstraZeneca (LON:AZN) shed 2.4% after detailed study results showed its experimental lung cancer drug did not significantly improve patients' overall survival results.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.