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(Alliance News) - Stock prices in Europe closed lower on Tuesday, with jitters in the banking sector re-emerging after less-than-stellar quarterly numbers from US regional lender First Republic.
Banking shares in Europe also fell, with quarterly results from Santander and UBS not receiving rave reviews either.
It was a better day for consumer-focused stocks, however, though Primark owner Associated British Foods was an exception.
The FTSE 100 index lost 21.07 points, or 0.4%, at 7,891.13 on Tuesday. The FTSE 250 slipped 11.55 points, or 0.1%, at 19,215.39, and the AIM All-Share ended down 4.59 points, or 0.6%, at 824.26.
The Cboe UK 100 ended down 0.3% at 789.74, the Cboe UK 250 lost 0.4% at 16,816.77, and the Cboe Small Companies down 0.1% at 13,323.45.
In European equities on Tuesday, the CAC 40 index in Paris lost 0.6%, though the DAX 40 in Frankfurt edged up 0.1%.
Major equity benchmarks in New York were lower. The Dow Jones Industrial Average was down 0.4%, the S&P 500 lost 0.8% and the Nasdaq Composite shed 1.0%.
The pound was quoted at USD1.2404 late Tuesday afternoon in London, lower compared to USD1.2457 at the close on Monday. The euro stood at USD1.0983 down against USD1.1026 late Wednesday. Against the yen, the dollar was trading at JPY133.98, lower compared to JPY134.38.
The yen was on the up amid risk-off trade on Tuesday, while the greenback was supported by President Joe Biden announcing a US re-election bid.
Biden announced Tuesday he is running for re-election in 2024, plunging at the record age of 80 into a ferocious new White House campaign "to finish the job".
"Every generation has a moment where they have had to stand up for democracy. To stand up for their fundamental freedoms," Biden wrote on Twitter, along with a video.
A big week for banking sector earnings kicked off with a whimper. Shares for European banking stocks were largely weaker as investors picked apart earnings from Santander and UBS.
Santander fell 6.0% in Madrid. It posted a profit hike though windfall taxes in Spain kept a lid on growth.
Weaker profit in its Brazil division also spooked investors.
UBS lost 2.2%. In its first quarterly report since the hastily-arranged takeover of stricken compatriot Credit Suisse, UBS reported a profit miss.
The Swiss bank reported a net profit of USD1.03 billion in the first quarter of 2023, down 47% from USD1.94 billion in the previous year, and falling short of consensus of USD1.7 billion.
Over in New York, a sharp share price fall for First Republic was one of the major stories. The stock plunged 30%.
First Republic – which announced a major employee downsizing to cut costs – reported deposits of USD104.5 billion at the end of March, a drop of nearly USD72 billion from the level at end-2022.
It is the bank's first batch of earnings since Silicon Valley Bank's dramatic collapse in March raised alarm bells about the vulnerabilities of regional lenders.
Also spooking investors, management took no questions during a subsequent earnings call.
Among large-cap London-listed banks, Standard Chartered is the first to report, announcing quarterly results on Wednesday.
While banking earnings underwhelmed, makers of consumer goods impressed. Nestle rose 0.8% in Zurich and PepsiCo was up 2.2% in New York on well-received quarterly figures.
On the up in London, Whitbread shot up 4.6%.
In the financial year that ended March 2, the Premier Inn-owner posted pretax profit of GBP374.9 million, multiplied from GBP58.2 million the year before. Whitbread said this was above pre-pandemic levels, driven primarily by its Premier Inn UK division. Revenue surged to GBP2.63 billion from GBP1.70 billion.
In addition, Whitbread announced a GBP300 million share buyback programme.
Associated British Foods fell 5.1% after setting out a cautious outlook in its Primark retail arm.
The FTSE 100 constituent said it is "cautious about the resilience of consumer spending", as shoppers face rampant inflationary pressure.
"We expect like-for-like sales growth in the second half, although we expect that growth to moderate from that in the first half," Chair Michael McLintock said.
Elsewhere in London, Hyve rose 4.2% to 119.80 pence after the events organiser backed a new and improved takeover bid from funds advised by Providence Equity Partners.
The new bid of 121p per share is up from 108p previously. The bid values Hyve at GBP363 million on a fully diluted basis and values it at around GBP524 million on an enterprise basis.
Unbound fell 14% after clothing company WoolOvers Group ruled out making a takeover bid. Unbound in March had said it was in discussions with WoolOvers for a potential bid.
Brent oil was quoted at USD80.52 a barrel at late Tuesday afternoon in London, flat from USD82.10 late Monday. Gold was quoted at USD1,987.63 an ounce, up slightly against USD1,982.78.
Still to come on Tuesday are earnings from Google owner Alphabet and computing firm Microsoft.
Wednesday's local corporate calendar has first-quarter results from pharmaceutical firm GSK and trading statements from consumer goods company Reckitt Benckiser and housebuilder Persimmon.
The economic diary has a consumer confidence reading from Germany at 0700 BST.
By Eric Cunha, Alliance News news editor
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