By Carla Mozee and Sara Sjolin, MarketWatch
Credit Suisse shares rally after earnings
Investors shoved European stocks lower Wednesday in the wake of
a selloff on Wall Street where equities were spooked by rising bond
yields and mixed earnings reports.
How markets are moving
Germany's DAX 30 index was the worst performing among the major
national indexes. It fell 1% to close at 12,422.30, suffering its
biggest daily loss in a month.
France's CAC 40 index declined 0.6% to 5,413.30, while the
U.K.'s FTSE 100 fell 0.6% to 7,379.32, breaking a six-session
winning streak
(http://www.marketwatch.com/story/ftse-100-drops-after-rising-bond-yields-spur-selloff-on-wall-street-2018-04-25).
The broader Stoxx Europe 600 index sank 0.8% to 380.18, pulling
further away from its highest levels since early February logged
earlier in the week.
The euro was buying $1.2176, down from $1.2233 late Tuesday in
New York.
The yield on Germany's 10-year bund was flat at 0.630%,
according to Tradeweb data, as prices fell.
Check out:Why the premium for German bonds over Treasurys is the
widest in 30 years
(http://www.marketwatch.com/story/why-the-premium-for-owning-german-bonds-over-treasurys-is-at-the-widest-in-30-years-2018-04-23)
What's driving the market
European stocks tumbled as traders globally fretted over a rise
in U.S. borrowing costs. The 10-year U.S. Treasury yield on Tuesday
touched the psychologically important 3% level for the first time
in four years and continued higher on Wednesday to 3.012%
(http://www.marketwatch.com/story/us-10-year-yield-blasts-further-past-3-flirts-with-highest-since-2011-2018-04-25).
U.S. bond yields have been rising on expectations that
inflationary pressures could prompt the Federal Reserve to ramp up
the pace of rate hikes, which would increase borrowing costs for
companies and consumers. European bond yields have also been
creeping higher. Higher yields can weigh on stocks as bonds start
to offer better returns than equities and raise borrowing
costs.
U.S. stocks also opened with losses
(http://www.marketwatch.com/story/stock-selloff-set-to-continue-as-10-year-yield-blows-further-past-3-2018-04-25)
on Wednesday, building on declines from Tuesday
(http://www.marketwatch.com/story/dow-shapes-up-to-break-losing-streak-but-earnings-could-kill-the-buzz-2018-04-24)
that were led by shares of industrial, basic materials and
technology companies after some mixed earnings from Caterpillar
Inc. (CAT) and 3M Co. (MMM).
Read:What it means for the market that the U.S. 10-year
government bond yield hit 3%
(http://www.marketwatch.com/story/heres-what-it-means-for-the-market-that-the-us-10-year-yields-3-2018-04-24)
(http://www.marketwatch.com/story/heres-what-it-means-for-the-market-that-the-us-10-year-yields-3-2018-04-24)Investors
in Europe will tune into what the European Central Bank will say
about economic growth in the eurozone on Thursday when the bank
releases its monetary policy decision.
Read:4 outcomes for the ECB meeting, in 1 handy chart
(http://www.marketwatch.com/story/4-scenarios-for-the-ecb-meeting-on-thursday-in-one-handy-chart-2018-04-24)
What are strategists saying?
"Equities continue to find it tough going at the moment, with
solid losses in the U.K. and Europe and U.S. stocks moving into the
red once more. Early signs of a possible stabilization before the
U.S. open were seen, but stocks swiftly fell once more," said Chris
Beauchamp, chief market analyst at IG, in a note.
"Earnings season continues to punish those with doubts about the
global outlook, as Twitter found out to its cost. A premarket jump
on headline earnings beats was sent brutally into reverse as the
firm's outlook for the year struck a distinctly gloomy note. This
is all very similar to Caterpillar last night, and the fact that
such disparate companies are being treated in such a similar way
speaks to a definite sense of unease among investors," he
added.
Read:Caterpillar shares reverse gains to slide 6% after CFO says
Q1 was peak for the year
(http://www.marketwatch.com/story/caterpillar-shares-reverse-gains-to-slide-6-after-cfo-says-q1-was-peak-for-the-year-2018-04-24)
Stocks in focus
Osram Licht AG shares (OSR.XE) tumbled 17% after the German
lighting maker late Tuesday cut its full-year target on earnings
before interest, taxes, depreciation and amortization.
Kering SA (KER.FR) bounced 4.6% higher as the luxury goods maker
said first-quarter revenue jumped 27%
(http://www.marketwatch.com/story/kering-revenue-soars-as-gucci-keeps-up-success-2018-04-25),
led by its flagship Gucci brand and "exceptional momentum" at
Balenciaga.
Credit Suisse Group AG shares (CSGN.EB) (CSGN.EB) rose 3.6% as
the Swiss lender said first-quarter net profit grew roughly 16%
(http://www.marketwatch.com/story/credit-suisse-profit-up-16-beating-forecasts-2018-04-25)
to 694 million Swiss francs ($709.1 million), beating expectations
of 653 million Swiss francs.
"With these first-quarter results, we got off to a good start in
our third and final year of restructuring," said Chief Executive
Tidjane Thiam said in a statement.
Metro Bank PLC shares (MTRO.LN) slid 7.3% as the U.K.-based
lender said its first-quarter profit increased more than fivefold
to GBP6.4 million ($8.9 million), but that its capital position has
weakened
(http://www.marketwatch.com/story/metro-bank-profit-soars-capital-ratio-falls-2018-04-25).
Shire PLC shares (SHPG) (SHPG) fell 2.8%, turning lower in
Wednesday trade. The drugmaker recommended shareholders accept
(http://www.marketwatch.com/story/shire-seems-ready-to-accept-latest-takeda-offer-2018-04-24)
an improved takeover bid from Takeda Pharmaceutical Co.
(4502.TO)
(END) Dow Jones Newswires
April 25, 2018 12:18 ET (16:18 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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