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Stocks fall on banking sector fears, weak Chinese recovery

Equiity markets traded lower after the financial sector came under pressure again on Tuesday due to a new tax on banking profits in Italy. Adding to investors’ woes was a string of weak economic data released by the world’s second-largest economy.

Shane Strowmatt, LGT
Tempo di lettura
5 minuto
US banks
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After rating agency Moody’s downgraded ten US banks and put some of the nation’s largest lenders under review on Monday, the next bit of rough news for the financial sector came out of Italy. The Italian government approved a surprise tax on bank profits, causing shares of Italian lenders to plummet Tuesday. UniCredit fell 5.94% and Intesa Sanpaolo dropped 8.67%. The new tax was a source of anxiety for the financial sector beyond the Italian border with the US benchmark KBW Bank Index finishing the day down 1.21% on Tuesday.

In Asia, stock markets were mixed with Chinese stocks trading lower on further weak economic data that call into question the strength of the country’s economic reopening this year. In July, consumer prices fell for the first time in more than two years. The Chinese Consumer Price Index dropped by 0.3% when compared with the same month a year earlier. The Producer Price Index also showed contracting prices, falling 4.4% year-on-year in July. Hong Kong's Hang Seng Index fell 0.3%, while the Shanghai Composite was trading down 0.41% on Wednesday. Elsewhere in Asia, Tokyo’s Nikkei 225 lost 0.4% while South Korea’s Kospi gained 1.3%. In Australia, the S&P/ASX 200 was also making gains, up 0.3%.

In New York, the major stock indices were down on Monday. The Dow Jones Industrial dropped 0.45% to 35,314.49 points and the S&P 500 fell 0.42%, closing at 4,499.38 points. The Nasdaq-100 lost 0.87% to end the session at 15,273.05 points.

In individual stocks, Novo Nordisk shares jumped 17% after the Danish pharmaceuticals company said its obesity drug "Wegovy" drastically reduces the risk of heart attacks and strokes. Shares of US rival Eli Lilly, which also produces an obesity drug known as "Mounjaro," likewise shot up almost 15% on Tuesday.

Corporate news in focus: Quarterly and half-year figures from Brenntag, Sony, Voestalpine, Ahold Delhaize, Continental, Walt Disney. Investor Day at Kellogg.

Economic data in focus: Weekly US EIA Petroleum Status Report (16:30 CET).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.