European stocks close more than 1% higher; UBS soars – CNBC

The pan-European Stoxx 600 index closed around 514 points on Tuesday, its highest level since intraday trading on April 2.

— Katrina Bishop

Shares of Infineon were trading up more than 12% in mid-afternoon trading in Europe.

Germany’s largest semiconductor maker lowered its forecast, citing prolonged weakness in demand, but also reported second-quarter sales that beat expectations.

Citi analysts, led by Andrew Gardiner, said in a note that the reduction in revenue outlook was in line with investors’ expectations.

“The updated forecasts, however, indicate that while demand is weaker than expected, the bottom of the cycle has also been reached for Infineon and they call for higher revenues in the June and September quarters q/q/q and to a low in margins in June-Q before improving in September-Q,” they wrote.

“Management cites continued weak demand in the consumer and industrial sectors and slowing growth in the automotive sector, with reduced expectations for FY24 for all 4 segments. We believe the reduction in Low to mid-single digit auto growth for FY24 is a conservative and reasonable measure in line with expectations, which should be welcomed by investors.”

— Katrina Bishop

Ferrari shares were down 4.3% in early afternoon trading, although the sports car maker reported that its year-over-year revenue and profit rose by double-digit percentages in the first quarter.

Shipments over the period remained almost stable at 3,560 compared to 3,567 last year. However, shipments to mainland China, Hong Kong and Taiwan – where Ferrari faces increasing competition from companies such as China’s BYD – fell by 20%.

CEO Benedetto Vigna said the company had achieved “an even stronger product and country mix as well as a greater contribution from personalization.”

“Our value-over-volume strategy continues to pay off,” Vigna added.

Trading in Milan-listed stocks was automatically suspended twice during the session as the price fell, before resuming.

-Jenni Reid

Sterling was slightly lower against the US dollar and euro on Tuesday, as markets prepare for messages from the Bank of England on interest rate developments this week.

Sterling was down 0.17% against the greenback at 12:15 p.m. in London, ending a streak of four consecutive sessions of gains, and down 0.1% against the euro.

The BoE’s monetary policy committee meets on Thursday when it is widely expected to keep its key rate at 5.25%. Beyond that, money market prices suggest about a 75% chance of a first rate cut of 25 basis points in August, according to LSEG data.

Matthew Ryan, head of market strategy at Ebury, noted that the British pound had outperformed all other G10 currencies in 2024 except the US dollar, driven by high interest rates, “high expectations for the long term” and a brighter economic situation.

“The first two will be tested this week at the Bank of England meeting on Thursday, where we hope to see clarity on the MPC’s expectations regarding the timing of the first cut. For now, markets are not expecting “Not likely to happen until late summer at the earliest. Any validation of this outlook by Bank of England officials would fuel the pound’s rally,” Ryan said in comments sent by. email.

Economists at BNP Paribas said in a note last week that the BoE was unlikely to provide specific guidance but would signal that it was “gaining more confidence in the disinflationary process.” They expect cuts of 75 basis points this year, more than markets currently anticipate, starting in August.

-Jenni Reid

Shares of several French cognac makers rebounded on Tuesday after French President Emmanuel Macron suggested that trade tensions between China and the European Union, which could impact drinks makers, could ease.

Two of France’s largest cognac producers, Pernod Ricard and Rémy Cointreau, were up 2.8% and 8.2% respectively as of 11:54 a.m. London time on Tuesday.

Earlier this year, China launched an anti-dumping investigation against European brandy makers, which could lead to tariffs being imposed on imports of the spirits. Macron addressed the dispute on Monday during a visit by Chinese President Xi Jinping, who is currently visiting Europe.

“I thank the president for his open attitude regarding the provisional measures on cognac and for his willingness not to implement them,” Macron said at a press conference on Monday.

Read the full story here.

—Sophie Kiderlin

Sven Schneider, Infineon’s chief financial officer, cites prolonged weak demand in key markets as the reason for lower expectations.

Shares in UniCredit bank were up more than 3% as of 9:50 a.m. in London, trading at their highest level since 2011, according to LSEG data.

Italy’s second-largest lender reported first-quarter net profit of 2.6 billion euros ($2.8 billion), ahead of a company consensus estimate, while raising its 2024 payout forecast at its 2023 level.

“We had a great quarter across all sectors and across all metrics, it’s a record, it’s the thirteenth quarter of profitable growth, and quite simply, we’re more confident about what we can achieve this year and we are moving forward with our plan to accrue profits over the course of the year,” UniCredit CEO Andrea Orcel told CNBC’s Charlotte Reed on Tuesday.

The bank’s results were also boosted by a positive surprise on systemic charges, Orcel added.

UBS shares were up 8% at 9:39 a.m. London time after the Swiss banking giant reported a return to profit after two quarterly losses and beat first-quarter expectations.

Lower spending and the benefits of consolidation following the June 2023 takeover of Credit Suisse helped the bank post first-quarter net profit of $1.8 billion, ahead of a consensus forecast in an LSEG poll of $721.4 million.

Learn more here.

-Jenni Reid

Chinese stocks have seen such a strong recovery after a prolonged decline in recent years that they have even beaten the S&P 500 so far this year.

This breakout comes after a deep and prolonged decline in Chinese markets, which lost nearly $5,000 billion in three years. Investors were pessimistic due to the housing debt crisis, slowing growth and other factors.

But is this rebound sustainable? Here’s what Wall Street and other analysts are saying, and what to buy in the market.

CNBC Pro subscribers can learn more here.

— Weizhen Tan

Macroeconomic uncertainties may have pushed consumers – particularly those in China – to tighten their purse strings and reduce spending on luxury goods. However, Barclays notes that several companies in the sector are currently making good plays.

While Chinese consumers’ spending intentions for the current quarter show they plan to spend more money on luxury, the investment bank’s analysts “remain cautious about seeing an improvement trends”.

Still, spending on luxury goods is expected to reach 68% this year, up from 66% in 2023, they wrote, revealing all three names equally.

CNBC Pro subscribers can learn more here.

-Amala Balakrishner

European markets are expected to open in mixed territory on Wednesday.

Britain’s FTSE 100 index is expected to open 14 points higher at 8,330, Germany’s DAX down 6 points at 18,429, France’s CAC up 4 points at 8,073 and Italy’s FTSE MIB down 48 points to 33,899, according to IG data.

Profits are expected to come from Alstom, BMW, Skanska, ABInbev, Siemens Energy, Swatch Group and Munich Re.

—Houx Ellyatt