European stocks open in the red as investors digest central bank moves

Hannah Ward-Glenton

European stocks opened lower Friday, as investors digested a slew of central bank rate hikes from the region and beyond.

The Stoxx 600 was down 0.2% at market open, with most sectors and major bourses trading in the red. Food and beverages, healthcare and retail were the only sectors to have made gains, with healthcare up 0.5%.

Oil and gas stocks were the biggest fallers, down 1.26% after the open.

Thursday’s market moves come after the Bank of England hiked rates by 50 basis points Thursday — its seventh consecutive increase, and the Swiss National Bank hiked its benchmark rate to0.5%, a shift that brings an end to an era of negative rates in Europe.

The U.S. Federal Reserve, meanwhile, hiked by another three-quarters of a percentage point Wednesday, and indicated that the hikes will keep on coming.

Bank of England raises benchmark rate by 50 basis points U.S. stocks closed lower Thursday, their third consecutive daily decline, and futures were also lower in early trade Friday. Asia markets, meanwhile, were in the red, with Australian stocks down 2%.

Euro zone likely entering recession as price rises hit demand

The euro zone will likely enter a recession as the downturn in business activity across the region deepened this month, according to S&P Global.

S&P Global’s Purchasing Managers’ Index (PMI) fell to 48.2 in September, down from 48.9 in August.

High energy costs hit manufacturers hard after Russia’s invasion of Ukraine, and soaring prices have contributed to worsening business conditions.

September is the third consecutive month that the PMI has fallen below 50 —the benchmark separating growth and contraction.

— Hannah Ward-Glenton

FTSE muted ahead of the U.K.’s mini-budget

The U.K.’s FTSE 100 is fairly flat this morning as investors await a mini-budget from the country’s Finance Minister Kwasi Kwarteng.

Measures laid out in the fiscal announcement are expected to boost the slowing British economy.

Tax cuts, energy subsidies and planning reforms are expected to make up the £200 billion ($225 billion) package.

— Hannah Ward-Glenton

HSBC warns investors to avoid European stocks

Investors should avoid allocating to Europe in the hunt for value stocks, as the continent’s energy crisis means the risk-reward is still not there, according to Willem Sels, global CIO at HSBC

Private Banking and Wealth Management.

“I would caution against buying Europe because of the cheaper valuations and interest rate movements,” said Willem Sels from HSBC Private Banking.

Here’s how the pan-European Stoxx 600 has traded year-to-date:

STOXX Europe 600 year-to-date

— Elliot Smith

Credit Suisse shares hit record low

Credit Suisse leads the market downturn early morning after a report of a possible capital raise.

Shares of the investment bank hit a record low of 4.335 francs in early trade.

— Hannah Ward-Glenton

European markets: Here are the opening calls

European stocks are expected to open in positive territory on Friday, as investors react to central bank rate hikes and U.S. recession signals.

The U.K.’s FTSE 100 index is expected to open around 25 points higher at 7,172, Germany’s DAX is seen 38 points higher at 12,581, France’s CAC 40 is expected to open up 13 points and Italy’s FTSE MIB is seen 42 points higher, according to data from IG.

CNBC Pro: Is it time to buy Treasurys? Here’s how to allocate your portfolio, according to the pros

The latest threat to stocks now isn’t any macro risk — it’s rising 2-year Treasury yields, according to some fund managers and strategists.

Short-term, relatively risk-free Treasury bonds and funds are back in the spotlight as the yield on the 2-year Treasury continues to surge.

So should investors be fleeing equities and piling into bonds?

— Weizhen Tan

CNBC Pro: Back hedge funds to outperform equities and bonds this year, UBS says

As both stocks and bond prices fall simultaneously, hedge funds have broadly outperformed and are “well placed to navigate current market volatility,” according to a new report by UBS.

As market volatility persists, the Swiss bank shared the types of hedge funds it prefers.

— Ganesh Rao

Nomura downgrades China’s 2023 growth outlook

Nomura downgraded its forecast for China’s 2023 annual growth to 4.3% from 5.1%.

Analysts cited a potentially prolonged Covid-zero policy or a spike in the nation’s infections after a possible reopening in March.

The latest downgrade comes after Goldman Sachs lowered its outlook earlier this week to 4.5% from 5.3%.

William Ma of Grow Investment Group told CNBC’s “Street Signs Asia” he’s optimistic on policy changes he sees coming after the People’s Party Congress in mid-October.

—Jihye Lee

Futures start flat in post-market trading

Stock futures were flat after another tumultuous day, as investors continue grappling with the Federal Reserve’s decision to up rates and worries about the health of the economy.

Dow Jones Futures went up 41 points, or .14%, to 30,190. The S&P 500 was up 4 points, which translates to .11%, at 3,776. The Nasdaq 100 rose 10 points, .09%, to 11,575,50.

— Alex Harring

Source : CNBC