European markets close lower with Fed in focus; Credit Suisse slips 4%

Jenni Reid

This is CNBC's live blog covering European markets.

The La Defense business district of Paris, France, on Feb. 6, 2023.

European markets closed lower Tuesday as investors weighed corporate earnings with the potential for the U.S. Federal Reserve to remain hawkish.

The pan-European Stoxx 600 index finished off 0.23% for the session, helped lower by Wall Street, with sectors a mixed bag. Tech stocks fell 1.5%, autos dropped 1% and basic resources slipped 1.2%; while banks gained 0.8%.

European markets

.FTSEFTSE 1007,627.20+56.33+0.74%
.FCHICAC 40 Index7,319.18+89.91+1.24%
.FTMIBFTSE MIB 26,713.40+305.40+1.16%
.IBEXIBEX 35 Idx9,191.10+75.00+0.82%

Credit Suisse shares fell on reports that remarks made by its chairman were being reviewed by the Swiss financial regulator. Axel Lehmann said outflows from the lender had stabilized in early December, but regulator Finma is reviewing whether the comments were potentially misleading, Reuters reported.

Elsewhere, the U.K. government posted a surprise budget surplus for January.

It comes as markets shift their expectations for significant interest rate cuts this year, pricing in U.S. interest rates above 5% by the end of the year as concerns about sticky inflation weigh on sentiment. The Fed will release minutes from its latest meeting on Wednesday.

Geopolitical tensions are also at the fore in Europe, with Russian President Vladimir Putin giving a speech on the war in Ukraine, which he continues to call a "special military operation."

U.S. President Joe Biden will deliver a speech in Poland later in the day, after visiting the Ukrainian capital Kyiv yesterday in a show of support for the country.

Asia-Pacific markets closed mixed Tuesday as purchasing managers' index data came in higher in Australia but lower in Japan. Hong Kong's Hang Seng Tech index was down 3.08%.

U.S. stocks dropped Tuesday as higher rates continue to pressure market sentiment, and the latest batch of retail earnings raised concern about the state of the consumer.

Tue, Feb 21 2023 10:50 AM EST

IHG CEO: Demand returning to pre-pandemic levels

Keith Barr, CEO at IHG, discusses the company's results, the removal of Chinese Covid restrictions, and employment trends in the hospitality and leisure industry.

Tue, Feb 21 2023 9:58 AM EST

U.S. stocks open lower

All major U.S. indexes fell on Tuesday morning.

The Dow Jones Industrial Average dropped 264 points, or 0.78%. The S&P 500 and Nasdaq Composite declined by 0.8% and 0.9%, respectively.

— Hakyung Kim

Tue, Feb 21 2023 8:32 AM EST

UK PMI comes in higher than expected in February

The U.K. composite Purchasing Managers' Index returned to growth in February after six months of declines.

Both manufacturing and services output increased in the survey, though the latter was stronger.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a note that the figures "indicate encouraging resilience of the economy" despite headwinds such as higher interest rates, the cost of living crisis , labor shortages and strikes.

"However, while the data suggest that near-term recession odds have fallen considerably, elevated inflation pressures clearly remain a concern, especially in the service sector," he said.

"As such, the resilience of the economy and the stickiness of the survey's inflation gauges add to the likelihood of the Bank of England tightening policy further, and potentially more aggressively, which may dampen future growth expectations and suggests that the possibility of recession later in the year should not be ruled out."

— Jenni Reid

Tue, Feb 21 2023 7:30 AM EST

Fund manager: U.S. banks are ‘far better’ than international peers

Freddie Lait, managing partner and portfolio manager at Latitude Investment, says U.S. banks are unlikely to be hit hard even in a recession scenario thanks to their "well capitalized" balance sheets. JP Morgan and Goldman Sachs are among the top 10 holdings in Lait's fund.

Tue, Feb 21 2023 6:58 AM EST

Stocks on the move: Smith & Nephew up 5.2%, Credit Suisse down 6.2%

British medical equipment manufacturer Smith & Nephew was the top performer on the Stoxx 600 in late morning trade, up 5.2%

The company reported slightly higher revenue but a drop in operating profit from $936 million to $901 million for 2022. It also said it had seen strong revenue growth in the fourth quarter and was making good progress on its plans for revenue growth of 5-6% and a trading profit margin of at least 17.5% next year.

Credit Suisse remained at the bottom of the index, down 6.2% on reports that it is being reviewed by the Swiss financial regulator for comments made by its chairman.

— Jenni Reid

Tue, Feb 21 2023 5:30 AM EST

Credit Suisse shares hit record low on reports Swiss regulator reviewing chair's comments

Axel Lehmann, chairman at Credit Suisse Group AG, speaks during the Institute of International Finance (IIF) annual membership meeting in Washington, DC, on Friday, Oct. 14, 2022.

Shares of Credit Suisse fell almost 5% in early trade on Tuesday, briefly touching a record low, after Reuters reported that the Swiss financial regulator is reviewing comments from Chairman Axel Lehmann about the lender's outflows stabilizing in early December.

Lehmann and other Credit Suisse representatives told media outlets in December that client withdrawals had "flattened out" and begun to reverse, and regulator Finma is reportedly exploring whether the statements were potentially misleading.

In its results on Feb. 9, Credit Suisse confirmed that net outflows hit 110.5 billion Swiss francs ($119.5 billion) in the fourth quarter of 2022.

Elliot Smith

Tue, Feb 21 2023 5:11 AM EST

British pound jumps after budget surplus

The U.K.'s pound jumped against the dollar Tuesday, following news that the country's government posted a surprise surplus in January.

Sterling was 0.47% higher against the dollar at 10:10 a.m. London time.

Katrina Bishop

Tue, Feb 21 2023 4:32 AM EST

UK government surprises with surplus in January

Skyscrapers under construction in London.

The U.K.'s public sector spent less than it received in income in January, the U.K.'s Office for National Statistics said Tuesday, surprising economists.

Public sector net borrowing in the U.K. was in surplus for the month, coming in at £5.4 billion ($6.4 billion). That's £5 billion more than expected by the independent Office for Budget Responsibility. Economists polled by Reuters, meanwhile, had expected borrowing of £7.85 billion.

The public purse got a boost from self-assessed tax receipts, which came in at £21.9 billion in January — the largest figure for the month since records began, the U.K.'s Office for National Statistics said Tuesday.

"January's high annual self-assessed tax receipts were partly offset by substantial spending on energy support schemes and large one-off payments relating to historic customs duties owed to the EU," the ONS noted.

Read more here.

— Katrina Bishop

Tue, Feb 21 2023 4:00 AM EST

These high-dividend stocks are expected to rally, with analysts giving one 60% upside

High-yielding stocks are back in the spotlight as volatility persists, inflation remains hot and Treasury yields continue to rise.

Data released last week showed that U.S. consumer inflation rose by 0.5% in January and was up 6.4% from a year ago — a larger-than-expected increase. Several Fed speakers hinted at further interest rate hikes after the data was released.

"Inflation that is 'too high' according to a rash of hawkish speakers, alluding to not only more hikes being needed, but requiring rates to be elevated for a more prolonged period, means that a hawkish Fed is not a 'breeze drifting on by,'" said Vishnu Varathan, head of economics and strategy at Mizuho Bank, in a Monday note. He also flagged that Treasury yields have risen materially since early February.

CNBC Pro subscribers can read more here.

— Weizhen Tan

Tue, Feb 21 2023 3:38 AM EST

France and Germany PMI data shows growth

Composite Purchasing Managers' Index figures for France and Germany returned to growth in February for the first time in months.

The French gauge of private sector business activity was positive for the first time since last October, though growth was modest.

Meanwhile, German PMI was positive for the first time in eight months.

However, in both cases, overall growth was achieved thanks to strength in services, with manufacturing PMI falling.

— Jenni Reid

Tue, Feb 21 2023 3:25 AM EST

European markets open lower

Europe's Stoxx 600 index was down 0.3% shortly after the open, with most sectors in the red.

Financial services fell 0.9%, mining stocks fell 0.75% and construction stocks were down 0.5%.

All major bourses posted declines, as the U.K.'s FTSE 100 fell 0.3% back below the 8,000 level it breached for the first time last week.

See Chart...
Stoxx 600.

— Jenni Reid

Tue, Feb 21 2023 2:00 AM EST

‘Insure against the worst’: Goldman picks stocks for a soft — and hard — economic landing

Investors are on edge after U.S. stocks fell for three consecutive weeks, signaling the possibility of higher interest rates for longer than expected.

The yield on the 6-month and 1-year Treasury bonds closed at 5% on Friday, thanks to several economic data releases last week that pointed toward a strong U.S. economy.

A rise in bond yields leads to increased borrowing costs for companies, which adds downward pressure on stocks.

Despite this challenging environment, Goldman Sachs remains optimistic and expects a "soft-landing" for the U.S. economy. In this scenario, inflation is controlled with a mild recession at most.

To capture the upside in a soft-landing scenario, the Wall Street bank said that investors should own stocks that can benefit from a decelerating inflation environment.

CNBC Pro subscribers can read more here.

— Ganesh Rao

Tue, Feb 21 2023 1:00 AM EST

Nvidia vs. TSMC: Wall Street pros name their favorite stock as chip battle heats up

It has been quite a start to the year for both Nvidia and Taiwan Semiconductor Manufacturing Company.

Both stocks have rallied in 2023, with shares of Nvidia soaring nearly 50% so far this year — an outperformance that's impressive even amid a broader market rally. TSMC's performance has been more muted in comparison, but it has still gained 14% this year.

But the sentiment surrounding companies is decidedly different.

Warren Buffett's Berkshire Hathaway has dumped most of its stake in TSMC, just months after buying the Taiwanese chipmaker's stock. The sale, disclosed in fourth-quarter 13F filings last week, comprised roughly 86% of Berkshire's stake in TSMC.

Meanwhile, investor interest in Nvidia has surged as it becomes seen as a way to play the growing hype around artificial intelligence.

CNBC Pro subscribers can read more here.

— Zavier Ong

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