European markets open to close; sterling slumps against the dollar

Stocks on the Move: Builders Suffer

UK homebuilders and developers stocks were the biggest losers near the close.

Vistry Group and Bellway were both down about 7%, while Taylor Wimpey and Persimmon were down about 6% at 4:15 p.m. in London.

It comes amid fears that the Bank of England will hike interest rates faster than expected, potentially hurting the outlook for the property sector.

– Jennie Reid

Stocks move: UK homebuilders tumble on weaker pound

UK homebuilders broadly fell to the bottom of the Stoxx 600 as a result of the pound’s collapse. Bellway, Persimmon, Taylor Wimpey, Vistry and Virgin Money all fell more than 6%.

At the top of Europe’s blue-chip index, shares in Swiss heating and ventilation maker Belimo Holding were up more than 9% by afternoon trade after Berenberg upgraded the stock to a ‘buy’ and raised its target price, citing rising earnings Demand for home renovations.

-Elliot Smith

UK bond yields face record monthly rise

UK government bond yields are on track for the biggest monthly rise recorded in Refinitiv and Bank of England data since 1957, an analysis by Reuters has revealed.

The 10-year gilt yield is up 131 basis points so far in September, with a sell-off intensifying on Friday after the government announced sweeping tax cuts. Yields move inversely with prices.

“The speed [of gilt yield rises] was pretty eye-catching. We haven’t seen moves like this since the financial crisis,” Craig Inches, head of rates and cash at Royal London Asset Management, told CNBC’s Squawk Box Europe.

“The problem you have now is that the markets are very thin, liquidity is very low and many market participants are trapped in long positions. There were a lot of people trying to get to the top in the interest rate profile and they were stopped by the markets,” he said.

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Analyst says there is back and forth between the Chancellor and the Bank of England

UK economy: “Something has to go wrong,” says bank CIO

As sterling plummets against the dollar to a record low in the early hours of Monday, the UK is in a position where “something has to break,” according to Kleinwort Hambros CIO Fahad Kamal.

“Sterling is the thing that seems to be taking a lot of the pressure off right now,” Kamal told CNBC’s Squawk Box Europe.

Pound fall:

According to the CIO, even falling energy prices would not lead to a drop in inflation anytime soon.

“The falling oil price will help, but ultimately inflation goes beyond oil prices and commodity prices, it’s much deeper and more ingrained and linked to things like rents and wages,” Kamal said.

– Hannah Ward-Glenton

German business sentiment plummets in September

According to the latest survey by the Ifo Institute in September, the mood in the German economy deteriorated rapidly.

The ifo business climate index fell to 84.3 points this month, the lowest since May 2020 and after 88.6 points in August.

“The decline affects all four sectors of the economy. The companies rate their current business significantly worse,” said Clemens Fuest, President of the ifo Institute.

“Pessimism for the coming months has increased significantly, expectations in retail have fallen to a record low. The German economy is slipping into recession.”

-Elliot Smith

Brent crude slips below $85 a barrel as the dollar rises

Brent crude fell below $85 a barrel on Monday as recession fears mounted and the US dollar surged.

Brent futures for November settlement were down over 1% at $84.92 as of 8am London time. West Texas Intermediate futures also fell to around $77.93.

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Central banks around the world – including the US and UK – continue to raise interest rates to fight inflation.

You can read the full story on CNBC here.

– Hannah Ward-Glenton

Stocks on the move: Belimo up 7%, K+S down 8%

Shares in Swiss heating and ventilation maker Belimo Holding were up more than 7% in early trade after Berenberg upgraded the stock to a ‘buy’ and raised its price target, citing rising demand for home renovations.

At the bottom end of the Stoxx 600, German chemicals group K+S fell 8%.

-Elliot Smith

Giorgia Meloni and her far-right party, Brothers of Italy, come first in Italian elections, a poll shows

Giorgia Meloni was seen during the campaign. Giorgia Meloni, leader of the right-wing nationalist and conservative Brothers of Italy (Fratelli dItalia, FDI) party, held the final election rally at Arenile in the left-leaning Bagnoli district of Naples.

Sopa Pictures | Light Rocket | Getty Images

Italians are on track to elect the country’s first female prime minister and the first far-right-led government since the end of World War II.

Giorgia Meloni’s Fratelli d’Italia (Brothers of Italy) party is expected to win 26.4% of the vote, according to an exit poll early Monday morning. The party is in a broad right-wing coalition with Matteo Salvini’s Lega, Silvio Berlusconi’s Forza Italia and a smaller coalition partner, Noi Moderati.

This alliance will win 44.43% of the vote according to exit polls, enough to secure a parliamentary majority with the centre-left bloc at 26.57%. Early projections of actual election results are due Monday morning.

Read more about the story here

Sterling hits record low against the dollar as Asia-Pacific currencies also weaken

CNBC Pro: Morningstar reveals its top high-dividend stocks worldwide – and gives three 30% upside potential

Morningstar has announced its picks of global stocks with the highest dividend yields, saying they stand out in an environment where “economic strains” may leave many companies unable to sustain their dividends.

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Pro subscribers can read more here.

— Ganesh Rao

CNBC Pro: Dan Niles predicts when the S&P 500 could bottom and reveals how it’s benefited him this year

Stocks are preparing to test their lows in the final week of trading for September

Heading into the last week of trading for September, the Dow and S&P 500 are each down about 6% for the month, while the Nasdaq is down 8%.

Both the Dow and the S&P are now 1.2% and 1.6% higher, respectively, from their mid-June lows. The Nasdaq is up 2.9% from its low.

European Markets: Here are the opening calls

European stocks are expected to open in negative territory on Wednesday as investors react to the latest US inflation data.

According to data from IG, the UK FTSE index is expected to open 47 points lower at 7,341, the German DAX 86 points lower at 13,106, the French CAC 40 28 points and the Italian FTSE MIB 132 points lower at 22,010.

Global markets retreated after a higher-than-expected U.S. CPI report for August, which showed prices rose 0.1% for the month and 8.3% annually in August, the Bureau of Labor Statistics reported on Tuesday, defying economists’ expectations that inflation would fall 0.1% on a monthly basis.

The core CPI, which excludes volatile food and energy costs, is up 0.6% since July and 6.3% since August 2021.

UK inflation figures for August are due and July euro-zone industrial production to be released.

— Holly Ellyatt