European Equity Market Handover: Italy drag shrugged off for now

Europe's stock market bounce was going so well before more ructions in Italy

Stock market snapshot as of [30/5/2019 3:29 PM] 

  • The European stock market bounce was going so well before more ructions in Italy opened a fresh seam of negative sentiment
  • Italy’s FTSE MIB has duly swung into the red and was down 0.3% at last look.  It comes as Deputy Prime Minister Matteo Salvini resumes the Northern League’s antipathy with the European Union. He’s insisting he’d rather end the coalition government than backtrack on a plan to cut taxes for most Italians. That would probably move Rome even further away from EU fiscal prescriptions
  • Most other large EU stock markets are off highs though still positive. It’s due to a combination of profit taking, oil shares tracking bullish inventory data and bank stocks
  • Investors anticipate favourable details about the ECB’s new short-term lending programme when the central bank meets next week
  • U.S. stock markets have opened firm, partly tracking a rebound in Treasury yields, with profit taking also seeping into that key safe-haven market after an eye-catching ramp of late, in step with dwindling risk appetite
  • A firm print by the second assessment of U.S. GDP is also helping underpin U.S. shares. Year-on-year growth printed at 3.1% compared to a consensus compiled by Bloomberg of 3%
  • As well, the weak core inflation component is being interpreted as likely to keep Fed policy on the backfoot – a de facto positive for risk assets

Corporate News

  • U.S. car shares are among the sectors leading from the front. In itself, that tends to back the profit realisation thesis for the more optimistic look of Wall Street on Thursday
  • Note MSCI’s global auto makers index is down about 2% since the beginning of the year
  • Dollar General beats first-quarter estimates enabling shares of the discount retailer to surge 7%

Upcoming corporate highlights


Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.