Europe Stocks Close Lower as Investors Weigh Record UK Wage Growth, China Data Miss; M&S Up 7%


European markets fell Tuesday as investors weighed wage growth figures from the U.K. and disappointing data from China.

The pan-European Stoxx 600 index closed 0.9% lower, with most sectors in negative territory. Basic resources slid 1.5% as banks and utilities both fell 1.2%.

Retail stocks were 0.5% higher, boosted by a 7.5% rise in shares of British department store chain Marks & Spencer, which raised its profit outlook in results published Tuesday.

Median monthly salaries in the U.K., excluding bonuses, increased 7.8% in July from the same period last year, according to early estimates by the Office for National Statistics. The figure is the largest annual growth rate since comparable records began in 2001, the ONS said.

Russia’s central bank hiked interest rates by 350 basis points to 12% at an emergency meeting, as Moscow looks to steady the rapid plummet of the country’s currency.

China reported data for July that broadly missed expectations overnight, with retail sales and industrial production both increasing below expectations. Fixed asset investment also rose at a slower rate than expected, and urban unemployment increased.

China’s central bank also announced rate cuts for the second time in three months.

Asia-Pacific markets finished mixed, while U.S. stocks opened lower as sentiment around China weighed.

Europe stocks close lower

Europe’s benchmark Stoxx 600 index provisionally closed the session 0.95% lower Tuesday, with most sectors and all major bourses in the red.

The U.K.’s FTSE 100 dropped 1.57% after data showed wages grew at a record rate. France’s CAC 40 was 1.1% lower as Germany’s DAX fell 0.8%.

Embracer Group down 5%

Swedish video games group Embracer posted the biggest decline among Stoxx 600 stocks in late trade, down 5% at 4 p.m. London time.

News website Axios on Monday reported that the company’s partner in a $2 billion gaming deal that collapsed in the spring had been the Saudi government-funded Savvy Games Group. CNBC has not independently verified the report.

Shares of the company plunged in May after it said it would not meet prior full-year guidance due to “not closing the transformative partnership- and licensing deals” it announced in March.

Fitch Ratings analyst warned that the U.S. banking industry has inched closer to another source of turbulence — the risk of sweeping rating downgrades on dozens of U.S. banks that could even include the likes of JPMorgan Chase.

The ratings agency cut its assessment of the industry’s health in June.

Another one-notch downgrade of the industry’s score, to A+ from AA-, would force Fitch to reevaluate ratings on each of the more than 70 U.S. banks it covers, Chris Wolfe told CNBC in an exclusive interview.

U.S. stocks open lower Tuesday

U.S. stocks began Tuesday’s trading session lower.

The Dow Jones Industrial Average declined 125 points, or 0.3%. The S&P 500 and the Nasdaq Composite also shed 0.4% and 0.3%, respectively.

U.S. retail sales exceed expectations

Retail sales data for July came in higher than expected in a sign of continued consumer strength.

The indicator of food service and retail sales grew by 0.7% in July from last month. Economists polled by Dow Jones anticipated a relatively modest 0.4% month-over-month increase.

Excluding automotives, sales grew by 1%. That notably exceeded economists’ forecast of 0.4%.

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German investor sentiment unexpectedly higher in August

German investors are feeling more positive about the economy than expected, according to research by the ZEW economic research institute.

The institute rates sentiment at minus 12.3 points, a 2.4-point improvement on July’s figure. Analysts polled by Reuters had expected sentiment to remain unchanged, with a reading of 14.7. The number is still in negative territory, suggesting a generally downbeat mood in Europe.

The index is based on how optimistic investors are about the upcoming six months by speaking to up to 300 financial and economic analysts about the economy and markets across the euro zone, the U.K., Japan and the United States.

UK grocery inflation down sharply to 12.7%, Kantar finds

U.K. grocery price inflation dropped by 2.2 percentage points to 12.7% in the four weeks to Aug. 6, according to Kantar data.

“Prices are still up year-on-year across every supermarket shelf, but consumers will have been relieved to see the cost of some staple goods starting to edge down compared with earlier in 2023,” said Fraser McKevitt, head of Kantar’s retail and consumer insight, worldpanel division, U.K.

He noted that the latest slowdown marked the second sharpest monthly fall since it began monitoring grocery inflation in 2008.

The research company found that large chain supermarkets Tesco and Sainsbury’s outperformed the market with 9.5% and 9.3% of sales growth over the 12 weeks to Aug. 6. Discount seller Aldi remained the fastest-growing retailer for the fourth time in row, Kantar estimated.

Tecan up 9% on confirmed 2023 outlook; net profit falls

Shares of Tecan were up 9.4% in morning trade after the Swiss health-care innovation company confirmed its 2023 outlook.

Tecan posted first-half net profit of 53.2 million Swiss francs ($60.7 million), a drop from 65.66 million francs in the previous year, but revenue grew 6.8% in local currencies on an underlying basis when excluding knock-on Covid-19 effects and reduced material cost pass-through.

Tecan confirmed its full-year 2023 outlook and forecast sales would increase in the low to mid single-digit percentage range in local currencies.

Russian central bank jacks up interest rates to 12%

Russia’s central bank on Tuesday hiked interest rates by 350 basis points to 12% at an emergency meeting, as Moscow looks to halt a rapid depreciation of the country’s ruble currency.

The ruble slumped near 102 to the dollar on Monday, as President Vladimir Putin’s economic advisor, Maxim Oreshkin, penned an op-ed in Russian state-owned Tass news agency that blamed the plunging currency and the acceleration of inflation on “loose monetary policy.”

Marks & Spencer up 8% on unscheduled performance update

Shares of Marks & Spencer were up more than 8% in early trading after the group gave an unscheduled update showing strong performance, and upgraded its guidance for the year.

Food sales led growth in the first 19 weeks of the year, up more than 11%, while clothing and home sales grew more than 6%.

There are still “considerable uncertainties” about the economic outlook, the company said in a statement, but it expects profit growth for the year as the interim results show “significant improvement” compared with previous expectations.

UK median wage up 7.8% in July; unemployment rises unexpectedly

Median monthly salaries in the U.K., excluding bonuses, increased 7.8% in July from the same period last year, according to early estimates by the Office for National Statistics.

The figure is the largest annual growth rate since comparable records began in 2001, the ONS said.

The unemployment rate, meanwhile, unexpectedly rose from 4% to 4.2%, the highest since the three-month period to October 2021.

Source : CNBC