Live updates from European markets: Central bank decisions in focus – CNBC

The pan-European Stoxx 600 closed up around 0.63% on Tuesday. that of London FTSE100 was 0.32% higher, French CAC40 was up 0.56% and that of Germany DAX increased by 0.8%.

UK Gilt yields also remained firmly higher, Return over 2 years trading around 4.878% at 4:30 p.m. London time.

— Katrina Bishop

Combined crude output from members of the influential Organization of the Petroleum Exporting Countries (OPEC) alliance fell sharply in May as several producers implemented voluntary cuts.

OPEC production lost 464,000 barrels per day last month, according to estimates by independent analysts published Tuesday in OPEC’s monthly oil market report.

Sharp production declines were seen in coalition leader Saudi Arabia, its close Middle East Gulf allies Kuwait and the United Arab Emirates, as well as Algeria in North Africa – four of nine countries that are collectively making 1.66 million barrels per day of voluntary reductions through the end of 2024.

Saudi Arabia has pledged to cut production by 500 billion barrels per day in June, but it will cap that decline with a further cut of 1 million barrels per day in July, which could be extended.

— Ruxandra Iordache

Mortgage lending plunged to mid-pandemic levels in the first quarter of this year, as stubbornly high interest rates depressed buying interest in Britain’s property sector.

Mortgage loans and liabilities in the UK reached £58.8 billion ($73.91 billion) in the first quarter, according to Bank of England data released on Tuesday. This is a decline of £22.9 billion in the quarter and 23.6% year-on-year, marking the lowest level seen since the second quarter of 2020, during the Covid-19 pandemic.

New mortgage commitments – agreed loans that will be brought forward in subsequent months – totaled £48.9 billion in the first quarter, down 16.1% quarter-on-quarter and 40.7% year-on-year. below the same period in 2022, which also represents the lowest levels recorded since. the second quarter of 2020.

High inflation in the UK – which stood at 8.7% in April – has kept the Bank of England on a path of successive interest rate hikes, feeding through into higher mortgage rates.

— Ruxandra Iordache

US economist Megan Greene, who joined the Bank of England’s monetary policy committee as an external member on Tuesday, told a parliamentary committee there was an “underlying persistence” of inflation UK.

“It’s probably easier to go from 10% to 5% … than to go from 5% to 2%,” Greene said in comments cited by Reuters.

“If you engage in stop-start monetary policy, you could end up having to tighten even more and generate an even worse recession on the other side. And also that inflation expectations cannot be allowed to become unanchored, otherwise you will end up in this situation.”

Yields on UK government bonds this morning rose to their highest level since late September, when former Prime Minister Liz Truss’s package of unfunded tax cuts sparked chaos in financial markets.

Yields on 2-year government bonds rose to 4.749% earlier Tuesday, according to Refinitiv data, before paring their gains to trade around 4.656% as of 9:45 a.m.

This rise brought them to within a hair of their peak on September 28, 2022, when 2-year yields reached 4.750%.

The move follows UK pay data which was more positive than expected. British wages excluding bonuses were on average 7.2% higher year-on-year in February-April, while a Reuters poll of economists forecast a 6.8% rise.

This data has raised expectations that the Bank of England will continue to raise interest rates, and potentially keep them higher for longer.

—Katrina Bishop and Jenni Reid

European stocks opened higher on Tuesday, with the benchmark Stoxx 600 index up 0.45% at 8:30 a.m. BST.

Technology stocks rose 1.7% as global investors anticipated a pause in rate hikes from the US Federal Reserve.

that of France CAC40 gained 0.73% while Germany DAX increased by 0.55% and that of the United Kingdom FTSE100 was trading up 0.22%.

UK wages excluding bonuses were on average 7.2% higher year-on-year between February and April, according to figures released on Tuesday, with the first period including the new minimum wage of £10.42 an hour.

A Reuters poll of economists forecast an increase of 6.8%.

Adjusted for inflation, salary growth fell annually by 2% including bonuses and 1.3% excluding bonuses.

Samuel Tombs, chief UK economist at Pantheon Macroeconomys, said wage growth was “far too buoyant” for the Bank of England to halt further rate rises.

He added that the rise from the previous quarter’s 6.6% wage growth would also fuel the recent rise in government bond yields and raise expectations for top rates “by stoking the perception that the “UK has a unique problem with high and entrenched inflation.”

The employment rate increased by 0.2 percentage points over the same period, with the number of people working reaching a record high.

Unemployment also increased by 0.1 percentage point, to 3.8%, due to a drop in the number of people classified as “economically inactive”, that is, unemployed or looking for work. ‘a job.

In a sign of a softening job market, the number of job vacancies fell by 79,000 to 1,051,000 in the three months to May, with companies citing economic pressures as the reason for curbing their hiring.

-Jenni Reid

Nvidiaa dominant player in the artificial intelligence-based computing market, could face increasing competition from custom chip designers in the near future, according to Morgan Stanley.

“Budget costs and energy requirements are, in our view, the two main limitations of future AI computing,” Morgan Stanley analysts led by Charlie Chan said in a note to clients on June 11.

“We therefore expect to see increasingly energy-efficient and low-cost AI custom chip designs, matching or even surpassing the growth of general-purpose GPUs from NVIDIA and AMD.”

The investment bank is “overweight” on five global stocks that could benefit from this trend.

CNBC Pro subscribers can learn more here.

-Ganesh Rao

Analysts have singled out a group of companies that will benefit from higher interest rates for longer: those that are cash-rich and have strong balance sheets.

Although the US Federal Reserve is expected to suspend its hikes this week, there are fears that it will resume them later. This is due to factors such as inflation which is more stubborn than it seems and a job market which continues to be tight.

CNBC Pro reviewed the S&P500 and MSCI World indices to search for such cash-rich stocks. One appeared on the screen with nearly 80% upside potential, and two other semiconductor stocks – currently popular with investors – also appeared.

CNBC Pro subscribers can learn more here.

— Weizhen Tan

European markets are expected to open in negative territory on Friday.

The United Kingdom FTSE100 index expected to open 22 points lower at 7,704, according to German index DAX down 3 points to 15,890, the French CAC 9 points less at 7,366 and that of Italy MIB FTSE down 20 points to 28,888, according to IG data.

Profits are expected to come from S4 Capital.

—Houx Ellyatt