Tag: Breaking News: Europe

UK inflation rises to 3.4% in December, above forecasts

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A shopper browses fruit and vegetables for sale at an indoor market in Sheffield, UK. The OECD recently predicted that the UK will experience the highest inflation among all advanced economies this year.

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The U.K. inflation rate rose to 3.4% in December, above forecasts of 3.3% from economists polled by Reuters.

The inflation rate had cooled sharply to 3.2% in the twelve months of November, with the data encouraging the Bank of England to cut interest rates at its final meeting of the year last month.

Core inflation, excluding energy, food, alcohol, and tobacco, stood at 3.2% in December, unchanged from November, according to the latest figures from the Office for National Statistics.

“Inflation ticked up a little in December, driven partly by higher tobacco prices, following recently-introduced excise duty increases,” the ONS’ Chief Economist Grant Fitzner commented on X Wednesday.

“Airfares also contributed to the increase with prices rising more than a year ago, likely because of the timing of return flights over the Christmas and New Year period. Rising food costs, particularly for bread and cereals, were also an upward driver,” he added.

These increases were partially offset by a fall in rents inflation and lower prices for a range of recreational and cultural purchases, the ONS noted.

Pound sterling was largely flat against the dollar following the data, at $1.3231.

Chancellor Rachel Reeves told CNBC Wednesday that the Bank of England had expected inflation to rise slightly before it’s expected to cool into spring and summer, toward the central bank’s 2% target.

“That continues to be their expectation and that continues to be my expectation, and that’s going to happen because of the measures I took in my budget last year,” she told CNBC at the World Economic Forum in Davos, Switzerland.

The figures, coming after employment data on Monday which showed further cooling in the labor market, still raise doubts over whether the BOE will proceed with its expected February rate cut, or could hold off a little longer, however.

“A small monthly rise in prices is unlikely to concern policymakers at the Bank of England in the short-term, especially as pay growth continues on a downwards trajectory,” Scott Gardner, investment strategist at J.P. Morgan Personal Investing, said in emailed comments Wednesday.

“If pay growth continues to fall and this is reflected in inflation data, it could place pressure on the Bank of England to cut interest rates faster than expected. Markets are currently pricing in one to two cuts this year but this could change as inflation data for 2026 starts coming through,” he said.

Matthew Ryan, head of Market Strategy at Ebury, said he expects the BOE to remain on hold for at least the next couple of meetings.

“The hawks on the committee have long emphasised upside risks to U.K. inflation, but these arguments are losing steam amid the deteriorating employment picture and the moderation in wage pressures,” he noted Tuesday.

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January 22, 2026
Euro zone inflation hits 2% in December, in line with forecasts

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Downtown Amsterdam

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Euro zone inflation stood at 2% in December, flash data from Eurostat showed on Wednesday.

Economists polled by Reuters had expected the inflation rate to cool to 2%, in line with the European Central Bank’s (ECB) target. In November, the inflation rate stood at 2.1%.

Core inflation, which excludes more volatile energy, food, alcohol and tobacco prices, stood at 2.3% in the year to December, down from 2.4% in November, while the annual rate of services inflation cooled to 3.4%, compared with 3.5% in November.

The ECB held its key deposit facility rate at 2% for the fourth consecutive time in December, having last cut rates in June.

The trim, which coincided with euro zone inflation hitting 2%, was part of a rate-cutting cycle that has brought rates down from 2024’s record high of 4%.

Top ECB board members told CNBC late last year that the easing cycle is close to, or at its end, although the central bank has repeatedly said it will take a meeting-by-meeting and data dependent approach to rate setting.

The euro and Stoxx 600 were unchanged on Wednesday following the data release, although the inflation rate returning to the ECB’s target could signal further rate cuts ahead.

“The move should please equity markets, as it gives the ECB yet another reason to cut interest rates further in 2026. That said, inflation has been hovering either side of the 2% level for most of last year, so today’s move is minor, but a positive, nonetheless,” Michael Field, chief equity strategist at Morningstar, said in emailed comments Wednesday.

“Central bankers walk a tightrope, attempting to stimulate the economy without igniting inflation. But with inflation low and steady, they should be able to take their foot off the brake and lean towards more stimulus sooner rather than later.”

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January 7, 2026
Higher inflation and unemployment cast shadow over Europe’s biggest economy

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A vendor gives a customer change at stall at a farmers market in Hanau, Germany, on Saturday, Aug. 9, 2025.

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Increases in unemployment and inflation cast a shadow over the outlook for Europe’s largest economy, which joins the wider EU bloc in bracing for the full impact of newly implemented U.S. tariffs.

German inflation rose by a higher-than-expected 2.1% in August, preliminary data showed Friday, exceeding the 2% expectations of analysts polled by Reuters. Inflation, which is harmonized for comparability across the euro zone, had risen by a cooler-than-expected 1.8% in July.

Germany’s core inflation, which excludes food and energy prices, was unchanged from the previous month at 2.7% in August, the country’s statistics office Destatis said.

Yields on German government bonds, known as Bunds, were little changed shortly after the data release, which came on the same day that labor office figures showed the number of unemployed people jumped to 3.025 million in August, to a rate of 6.4%.

The broader euro zone inflation reading, due Tuesday, will offer further insight into the economic impact of U.S. President Donald Trump’s tariff policies, which have hit various European sectors in recent months.

The U.S. and EU struck a trade agreement in July, including a 15% tariff rate on many EU goods exported to the U.S. Fresh details released earlier this month suggested that this blanket rate will also be applied to some hotly contested sectors like pharmaceuticals — but crucial questions still remain unanswered, leaving businesses on edge.

The tariffs are widely expected to drive prices higher in the U.S., but their effect on costs elsewhere is less clear.

Germany’s highly export-driven economy has long been hovering near the flatline. The country’s gross domestic product expanded by 0.3% in the first quarter, before contracting by 0.3% in the following period, according to the latest data from Destatis.

“It remains to be seen how European and US companies will react to US tariffs. While one scenario could see prices falling in the eurozone due to overcapacity and weaker sales in the US, globally operating companies might try to actually increase prices in Europe in order to offset profit-squeezing in the US,” said Carsten Brzeski, global head of macro at ING, in a note.

“A rather domestic theme will be the cooling of the German labour market, which should take away wage pressures and consequently inflationary pressures,” he added, noting that the inflationary hike in Germany now weakens the case for the European Central Bank to press ahead with an interest rate cut at its September meeting.

The ECB most recently opted to hold its key rate unchanged at 2% during its July meeting.

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September 4, 2025
Barclays profit jumps 23% in third quarter, beating expectations

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LONDON — British bank Barclays on Thursday reported £1.6 billion ($2 billion) net profit attributable to shareholders for the third quarter, beating expectations.

The result compared with the £1.17 billion net profit forecast in an LSEG poll of analysts and was 23% higher than the same period in 2023.

Revenue for the period came in at £6.5 billion, slightly ahead of a forecast of £6.39 billion.

Barclays shares opened 2% higher in London.

The lender’s return on tangible equity rose to 12.3% from 9.9% in the second quarter, as its CET1 ratio — a measure of solvency — rose to 13.8% from 13.6%.

Earlier this year, Barclays announced a strategic overhaul in an effort to cut costs, boost shareholder returns and stabilize its long-term financial performance, placing more focus on domestic lending while reducing costs at its more volatile investment banking unit. That strategy has included the acquisition of U.K. retail banking business Tesco Bank.

In the second quarter, Barclays net profit fell slightly year-on-year amid lower income at its U.K. consumer bank and corporate bank, as net profit jumped 10% at its investment bank.

Those gaps closed in the third quarter, with domestic bank income up 4%, with the lender raising its annual forecast for U.K. retail net interest income to £6.5 billion from £6.3 billion. Corporate bank income was 1% higher due to a rise in average deposit balances, while investment banking income gained 6%.

Amid declines, income at Barclays’ private U.S. consumer bank dipped 2% year-on-year as its wealth management unit fell 3%.

Barclays CEO C. S. Venkatakrishnan told CNBC on Thursday the results showed the bank was on track to meet the targets it had set out in February.

“We are guiding upwards in our net interest income, and we’ve had two continuous quarters of NII expansion in our business in the U.K. So we’re guiding up, both for the U.K. business and for the bank as a whole, and then we see costs very much under control.”

The bank now sees group NII of above £11 billion for full-year 2024, from a previous outlook of £11 billion.

Barclays shares have soared 55% in the year to date after dipping in 2023.

Several banks have announced plans to restructure, streamline operations and cut costs as they face a potential weakening of net interest margins as interest rates fall. HSBC earlier this week said it would consolidate its operations into four business units.

“What I would say on interest rates is, Barclays has had a very disciplined approach to interest rate management, and so we’ve got this thing called the structural hedge, which is a way of smoothing out the effects of interest rates on our income, and that’s part of what is causing our NII expansion over the last couple of quarters. So we are pretty well protected against changes in interest rates in the near term,” Venkatakrishnan said.

Deutsche Bank kicked off the third-quarter reporting season on Wednesday, posting higher-than-expected net profit as revenue at both its investment bank and asset management divisions jumped 11% year-on-year.

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October 23, 2024
Deutsche Bank swings back to quarterly profit as legal provisions cut, investment banking shines
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A sign for Deutsche Bank AG at a bank branch in the financial district of Frankfurt, Germany, on Thursday, Feb. 2, 2023.

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Deutsche Bank on Wednesday beat expectations in its return to profit in the three months to September, after snapping its 15-quarter profit streak in the second quarter.

Net profit attributable to shareholders came in at 1.461 billion euros ($1.58 billion) over the third quarter, compared with the 1.047 billion euros anticipated in a LSEG poll of analysts.

Revenue hit 7.5 billion euros, against a LSEG analyst forecast of 7.338 billion euros.

Other third-quarter highlights included:

Profit before tax of 2.26 billion euros, up 31% year-on-year.

Provision for credit losses of 494 million euros, up from 245 million euros in same quarter of last year.

CET 1 capital ratio, a measure of bank solvency, was 13.8%, up from 13.5% in the second quarter.

Return on tangible equity reached 10.2% (or 7.6% if adjusted for the lender’s litigation provisions), up from 7.3% year-over-year.

Germany’s largest lender had posted a 143-million-euro loss in the second quarter, at the time announcing it would not embark on a second share buyback program this year and factoring in a provision for its long-running lawsuit over its acquisition of its Postbank division. Some 60% of plaintiffs in the litigation, pillared on allegations that Deutsche Bank underpaid for its purchase, have since settled with the German bank in August.

“We’re looking to turn the page really this year on all of the legacy items that we’ve had over time, because we don’t want to be surprising investors with the type of provision that we had to build in the second quarter,” Deutsche Bank Chief Financial Officer James von Moltke told CNBC’s Carolin Roth on Wednesday.

The partial release of 440 million euros of litigation provisions in the third quarter helped boost profit, Deutsche Bank said, and the lender has now guided it has applied for a share repurchase — a step previously stalled by the Postbank legal proceedings.

“We will continue on our path of profitable growth and exceed our original goals for capital distributions to shareholders,” Deutsche Bank CEO Christian Sewing said Wednesday. Von Moltke clarified to CNBC that these are buybacks the bank intends to execute next year.

The lender also noted revenues from its investment bank divisions rose to 2.5 billion euros, up 11% over the same period of last year, flagging growth in its fixed income and currencies unit. Asset management net revenues were 660 million euros, also 11% higher year-over-year.

Von Moltke noted that the two divisions gave the bank’s “standout performance” in the third quarter, with the corporate and private banks also doing “what we expected this year, which is dealing with the sort of back-end of the cycle of interest rates, and offsetting the interest rate pressure now with growth in fee and commission income.”

Touching on the broader macro framework, von Moltke on Wednesday acknowledged some disappointment with the pace of economic recovery in Deutsche Bank’s native Germany and assessed that the third-quarter conditions have carried into the fourth.

“There’s always a degree of volatility around events like an election that’s coming up in a couple of weeks,” he said with reference to the upcoming vote in the U.S., whose outcome could ripple into foreign currency. “And, of course, a reaction to what expectations are for policy change after the election. So that, to us, is reasonably encouraging.”

The performance of European lenders has been fortified by a spate of stock buybacks and dividends in recent years — and now faces the pressure of delivering earnings growth to keep pace with the profitability of U.S. peers in an environment of declining interest rates, after the European Central Bank began loosening monetary policy over the summer.

“Looking back, while the industry has reduced costs and kept credit quality high, the improvement in returns since 2021 appears to be largely owed to rising interest rates,” analysts at McKinsey warned in the consulting firm’s Global Banking Annual Review 2024, flagging that, in order to maintain current ROTE (return on tangible equity) margins, banks would need to trim costs approximately 2.5 times as fast as revenues fall.

Deutsche Bank, whose shares have gained nearly 30% this year to date, in February embarked on a sweeping cost-saving push set to lighten the lender’s headcount by 3,500 roles by 2025 — a figure that includes 800 cuts announced in the previous year. The bank said its full-time workforce was now 90,236, after adding 766 staff during the third quarter.

Market participants are hotly surveying the broader banking sector, after Deutsche Bank distanced itself from the prospect of a long-anticipated merger with domestic rival Commerzbank, which now faces a potential acquisition by Italy’s Unicredit. Von Moltke said Deutsche Bank looks at the potential merger with “equanimity.”

Other European banks are also due to post third-quarter earnings over the coming days, with Barclays out on Thursday and Swiss giant UBS reporting next week.

Correction: This story has been amended to correct the source of a quote from Christian Sewing.
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October 22, 2024
UniCredit’s Andrea Orcel plays a bold hand, with Commerzbank in his sights

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UniCredit CEO Andrea Orcel during an interview at the World Economic Forum (WEF) in Davos, Switzerland, on Jan. 18, 2024.

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UniCredit‘s CEO Andrea Orcel revealed his hand this week as the Italian lender built a 9% stake in Commerzbank — and a takeover bid for the German rival could still be in the cards.

UniCredit faces a number of hurdles before increasing its stake after filing a request to “potentially exceed 9.9% of Commerzbank if and when necessary.” Commerzbank shares soared on Wednesday when news of UniCredit’s position was announced, and compounded gains on Thursday following speculation of an imminent takeover.

“All the options are on the table,” Orcel said Thursday in a Bloomberg TV interview, stressing that “it’s very simple to engage with all the stakeholders and see if the basis for a combination is there. And if it’s not, and it is the basis for sponsoring or propelling further Commerzbank in delivering a … transformation, then we will have delivered a lot of value for our shareholders as well.”

Roughly half of UniCredit’s freshly acquired stake was purchased from Commerzbank’s largest shareholder, the German government, which is seeking to gradually exit its position after injecting 18.2 billion euros ($20.05 billion) to prop up the bank during the 2008 financial crisis. The authorities, which retain a 12% shareholding, last week said that around 13.15 billion euros of the rescue sum had been repaid to date.

All eyes are now on whether UniCredit will make the leap when the German government returns to offload its shares into the market.

“There is the possibility that the government sells down further. We would be interested, at the right terms,” Orcel said Thursday. “There is the possibility that we buy in the open market. Or there is the possibility that we do nothing. But unless we ask for the authorization first, we don’t have that flexibility.”

The Italian bank already has a presence in Germany through its Munich-based lender HypoVereinsbank. In a Thursday note, Berenberg analysts stressed that a Commerzbank takeover would fit with Orcel’s broader expansion strategy and create Germany’s second-largest bank, with a market share of roughly 8% of customer loans.

“UniCredit has always seen itself as a pan-European bank and its CEO wants this to remain the case,” they said. “Expanding its presence in countries where it already has an operation is therefore compatible with this goal.”

UniCredit took a similar cross-border step last year, when it purchased a nearly 9% stake of Alpha Bank from the state-owned Hellenic Financial Stability Fund, although it has yet to make any more moves targeting the Greek bank.

Until recently, Germany’s largest lender Deutsche Bank had been seen as the prime contender to take over Commerzbank, following an abrupt collapse of initial talks in 2019. Whispers cooled in January, however, when Deutsche Bank CEO Christian Sewing said that merger and acquisition activity was not a priority for the group at the time.

A UniCredit takeover of Commerzbank would emerge as a rare, if long-awaited, instance of consolidation among Europe’s banking titans. The resource-intensive and time-consuming process is often stymied by regulatory hurdles and limits on large exposures.

Orcel, however, is angling in on Commerzbank at “probably one of the best moments he could have,” according to David Benamou of Axiom Alternative Investments.

“It’s a fantastic move, financially,” Benamou told CNBC’s Steve Sedgwick on Thursday.

He noted that the stock building comes when Commerzbank has yet to validate its August share buyback plan involving a first tranche of 600 million euros, or roughly 3.3% of its market capitalization as of Thursday, with the European Central Bank — meaning the scheme is not yet fully priced into the German bank’s “very low” valuation.

Analysts from Berenberg added that a potential acquisition of Commerzbank would “materially” reduce the odds of UniCredit pursuing domestic consolidation in Italy — where the lender backed out of talks with the world’s oldest bank, Monte dei Paschi, in 2021.

Additionally, “UniCredit would have to navigate through potential political and trade union objections about the deal, which could limit the value extraction from this acquisition. Lastly, as the combined entity would be a bigger and more complex bank, it could be faced with increased capital requirements,” Berenberg said.

Already, Commerzbank is seeking to fend off a potential acquisition, Reuters has reported, while Frank Werneke, the head of one of Germany’s largest trade unions Verdi, called on the German government to retain its share in Commerzbank “until further notice in order to avert a takeover,” according to a Google-translated statement.

— CNBC’s Ganesh Rao contributed to this report.

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September 12, 2024
British tech entrepreneur Mike Lynch reported missing after superyacht sinks off Sicily

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Mike Lynch, former chief executive officer at Hewlett-Packard Co.’s Autonomy unit, speaking at a conference on Thursday, April 25, 2013.

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LONDON — British tech entrepreneur Mike Lynch is missing after the sinking of a superyacht off the coast of Sicily, sources familiar with the matter told CNBC.

The sources, who preferred not to be named due to the sensitivity of the situation, said that Angela Bacares, Lynch’s wife, was confirmed as having been rescued.

The superyacht, called the Bayesian, capsized at around 5 a.m. local time while anchored off the coast of Porticello, a small fishing village located in the province of Palermo in Italy, according to various media reports.

Bayesian, a 56-meter-long sailboat, which later sank off the Sicilian capital Palermo, is seen in Santa Flavia, Italy August 18, 2024 in this picture obtained from social media.

Baia Santa Nicolicchia | Fabio La Bianca | Via Reuters

The vessel was reportedly struck by an unexpectedly violent storm.

At least one man has died and six others were reported missing, while 15 people were rescued including a 1-year-old baby, NBC News reported, citing local officials.

The yacht “suddenly sank” most likely “due to the terrible weather conditions,” the City Council of Bagheria said, according to NBC.

A carabinieri vehicle parked near the harbor where search continues for missing passengers after a yacht capsized on August 19, 2024 off the coast of Palermo, Italy.

Vincenzo Pepe | Getty Images

Who is Mike Lynch?

Lynch, 59, is the founder of enterprise software firm Autonomy. He became the target of a protracted legal battle with Hewlett Packard after the U.S. tech giant accused him of inflating Autonomy’s value in an $11 billion sale.

HP took an $8.8 billion write-down on the value of Autonomy within a year of buying it.

Lynch was extradited from Britain to the U.S. last year to stand trial over the HP allegations. In June, he was acquitted of fraud charges following the trial, which lasted for three months.

Lynch was born in Ilford, a large town in East London, in 1965 and grew up near Chelmsford in the English county of Essex. He attended the University of Cambridge, where he studied natural sciences, focusing on areas including electronics, mathematics and biology.

After completing his undergraduate studies, Lynch completed a Ph.D. in signals processing and communications.

Toward the end of the 1980s, Lynch founded a firm called Lynett Systems Ltd. which produced designs and audio products for the music industry.

A view of the MarineTraffic app (a website that tracks vessels using their publicly-available onboard transponders) on a mobile phone showing the last known location of the yacht Bayesian.

Yui Mok | PA Images | Getty Images

A few years later, in the early 1990s, he founded a fingerprint recognition business called Cambridge Neurodynamics, which counted the South Yorkshire Police among its customers.

But his big break came in 1996 with Autonomy, which he co-founded with David Tabizel and Richard Gaunt as a spinoff from Cambridge Neurodynamics. The company scaled into one of Britain’s biggest tech firms.

Lynch held a lot of influence in the U.K. technology sphere at the height of his success, having once been dubbed Britain’s Bill Gates by the media.

He co-founded Invoke Capital, a venture capital firm focused on backing European tech startups, in 2012.

In his role as a venture capitalist, Lynch was closely involved in helping British cybersecurity firm Darktrace and legal software startup Luminance get off the ground, backing both firms with sizable sums.

Lynch was previously on the board of U.K. broadcaster BBC. He also once served as an advisor to the British government on the Council for Science and Technology.

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August 19, 2024
UBS posts $1.14 billion profit in second quarter, smashing expectations

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General view of the UBS building in Manhattan, New York City, on June 5, 2023.

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Swiss banking giant UBS on Wednesday smashed net profit expectations for the second quarter, as revenue swelled at its global wealth management and investment bank units.

Net profit attributable to shareholders came in at $1.136 billion for the period, versus a company-compiled consensus forecast of $528 million.

Profit was nonetheless lower than the $1.755 reported in the first quarter, as expected by analysts.

Group revenue also beat forecasts in the second quarter, coming in at $11.904 billion versus an LSEG-compiled poll of $11.522 billion.

In the bank’s global wealth management unit, revenue increased by 15% to $6.053 billion, which UBS said was largely due to the consolidation of Credit Suisse. Revenue in the investment bank unit leapt 38% to $2.803 billion.

In its outlook, UBS said the macroeconomic outlook “continues to be clouded by ongoing conflicts, other geopolitical tensions and the upcoming US elections.”

It added: “We expect these uncertainties to persist for the foreseeable future, and they will likely lead to higher market volatility compared with the first half of the year.”

UBS had swung back to profit in the first quarter after two quarterly losses, but it warned that its net interest income would fall in both its global wealth management and its personal and corporate banking divisions.

It has now been over a year since UBS formally took over Credit Suisse, triggering a huge integration process and creating a wealth management juggernaut. UBS said at the start of July the merger process had completed and that Credit Suisse — the Swiss bank which spectacularly collapsed in March 2023 after years of financial scandals — no longer existed as a separate entity.

This is a breaking news story and will be updated shortly.

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August 13, 2024
Wegovy maker Novo Nordisk posts earnings miss, cuts operating profit outlook

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Novo Nordisk Wegovy manufactured by Novo Nordisk packaging is seen in this illustration photo taken in a pharmacy in Krakow, Poland on April 8, 2024. (Photo by Jakub Porzycki/NurPhoto via Getty Images)

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Novo Nordisk on Wednesday posted weaker-than-expected net profit in the second quarter and trimmed its operating profit outlook.

The pharmaceutical giant said its net profit came in at 20.05 billion Danish kroner ($2.93 billion) in the three months to the end of June. A LSEG aggregate forecast had projected the figure would come in at 20.9 billion Danish kroner.

EBIT — earnings before interest and tax — came in at 25.93 billion Danish kroner in the second quarter, which was also below the LSEG forecast of 26.86 billion Danish kroner.

Novo Nordisk also trimmed its operating profit outlook for full-year 2024, saying growth was now anticipated to come in between 20% and 28%, rather than the previously expected 22% to 30% range.

In the first quarter of 2024, the Wegovy maker had posted a net profit increase of 28% to 25.4 billion Danish kroner year on year, slightly bumping up its forecasts for sales and operating profit growth.

Sales growth expectations were raised once more on Wednesday, with the company now issuing a guidance of 22% to 28% at constant exchange rates for full-year 2024. The sales growth outlook for the period had been penciled in at 19% to 27% previously.

Sales of popular weight loss drug Wegovy jumped 55% in the second quarter of 2024, compared to the same period in 2023, coming in at 11.66 billion kroner.

Novo Nordisk is facing increasing competition in the weight loss space, both from smaller companies and from pharmaceutical giants such as Roche, which last month shared promising early-stage trial data from its own obesity drug candidate.

Novo Nordisk’s Wegovy has also had promising news in recent months. The drug was approved in China in the second quarter, opening it for sale in the world’s second largest economy. Elsewhere, the U.K.’s and European Union’s medical regulators said it was backing Wegovy as a way to reduce risks of serious heart events among overweight and obese adults.

This breaking news story is being updated.

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August 6, 2024
Europe stocks close 2.2% lower amid global downturn as volatility index spikes to Covid-era high

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LONDON — European markets fell sharply at the start of the new trading week, though pared losses towards the end of the session amid a global stock sell-off.

The regional Stoxx 600 index closed 2.17% lower, pulling back from declines of more than 3% as the technology sector clawed back some ground to end 0.9% lower.

All sectors and major bourses nonetheless finished in the red, with utilities and oil and gas stocks both losing over 3%.

Strategists pointed to several causes for the downturn across Europe, Asia and the U.S. which began last week, including fears of a U.S. recession and rapid Federal Reserve Rate cuts, the recent hawkish pivot by the Bank of Japan and crash in the yen “carry trade,” and an ongoing re-rating of the tech sector.

The VIX, a measure of expected market volatility, jumped more than 100% to 64.06 during Monday trade before cooling to around 35, still its highest level since 2020.

U.S. stocks saw steep losses through the morning, with the Dow Jones Industrial Average losing nearly 1,000 points, or 2.5%, as the tech-heavy Nasdaq Composite fell 2.6%.

Asia-Pacific markets had led the sell-off on Monday. Japan stocks entered a bear market, with the Nikkei 225 losing 12.4% to log its worst day since 1987.

The broad-based Topix also saw a rout, tumbling 12.23%, while heavyweight trading houses such as Mitsubishi, Mitsui and Co., Sumitomo and Marubeni all plunged more than 14%.

The yen, meanwhile, rose to its highest level against the dollar since January as U.S. Treasurys gained.

On the data front, demand for U.K. services rose in July, increasing to 52.5 from 52.1 the previous month, fresh purchasing managers’ index data showed Monday. Corresponding data for Italy and Spain also pointed to sustained growth in the sector but at a slower pace than previous months.

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August 5, 2024
Barclays profit dips in the second quarter, beats estimates
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One Churchill Place skyscraper, the Barclays Plc headquarters, at Canary Wharf in London, U.K., on Thursday, Jan. 7, 2021.

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LONDON — Barclays on Thursday reported second-quarter net profit attributable to shareholders of £1.2 billion ($1.54 billion), slightly lower than a year ago, as the lender’s net interest income in its core U.K. units fell.

Analysts polled by Reuters had expected attributable net profit of £1.03 billion for the period, according to LSEG data, in a decline from the £1.3 billion logged in the second quarter of 2023.

Shares were 2% higher at 8:09 a.m. London time.

Barclays posted revenue of £6.3 billion for the latest quarter, above a forecast of £6.25 billion. It also announced a share buyback program of up to £750 million.

Net interest income at Barclays’ consumer bank dropped 4% year-on-year to £3.15 billion across the January-June period, as its net interest margin declined from 3.2% to 3.15%. Income at the Barclays corporate bank fell 6%, as lower liquidity pool income offset the higher interest rate environment.

Performance was stronger at its investment bank, where income jumped 10% to £3.02 billion in the second quarter.

Barclays share price.

Max Georgiou, analyst at research firm Third Bridge, said that the Barclays investment banking revenue had outperformed expectations, providing a positive for the bank’s mid-term targets.

“To continue executing this strategy we expect to see a continued focus on regrowing share in the U.S. market,” Georgiou said.

On Thursday, Barclays also raised its full-year net interest income target for the group — excluding the head office and investment bank divisions — to circa £11 billion, from £10.7 billion previously.

Other highlights from the results included:

Credit impairment charges were steady year-on-year in the second quarter at £400 million.

Common equity tier one (CET1) capital ratio, a measure of bank’s financial strength, was 13.6%, down from 13.8% in December 2023.

Restructure underway

The British lender this year kicked off a major restructure aiming to improve efficiencies and boost profits, driving its share price 52% higher in the year to date.

Launching that program resulted in a net loss of £111 million in the fourth quarter of 2023, but the bank returned to profit in the first quarter despite a decline in year-on-year revenue.

Group Chief Executive C. S. Venkatakrishnan said Thursday the three-year plan was making “good progress,” with return on tangible equity of 11.1% across January-June meeting its target of above 10% for the year.

“We completed the sale of the performing Italian mortgage book, announced the sale of the German consumer finance business, and are on track to complete the acquisition of Tesco Bank in November 2024,” Venkatakrishnan said.

The lender’s restructure split the corporate and investment bank across Barclays U.K., Barclays U.K. Corporate Bank, Barclays Private Bank and Wealth Management, Barclays Investment Bank and Barclays U.S. Consumer Bank.
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July 31, 2024
Deutsche Bank shares drop 8% after lender snaps 15-quarter profit streak
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Deutsche Bank on Wednesday snapped a 15-quarter profit streak with a narrower-than-expected loss, as it made a provision for an ongoing lawsuit over its Postbank division and confirmed it would not make a second share buyback this year.

Shares provisionally ended the session down more than 8%, despite analysts characterizing the results as broadly solid.

Deutsche Bank share price.

Net loss attributable to shareholders was 143 million euros ($155.1 million), against an LSEG poll of analysts which had predicted a loss of 145 million euros.

Germany’s biggest bank had previously flagged it would take a hit in the quarter on the back of the Postbank provision, which it confirmed Wednesday would amount to 1.3 billion euros. The long-running lawsuit by investors alleges Deutsche Bank underpaid to take over the retail banking giant in 2010.

The bank said it remained on track with its distribution commitment to shareholders, which it has previously stated is for a sum in excess of 8 billion euros in share buybacks across the 2021-2025 financial year period.

“On the share repurchase side…unfortunately, prudently we had to step back from the idea of a second repurchase this year, what our focus is now is building excess capital through the back of the year,” Chief Financial Officer James von Moltke told CNBC’s Caroline Roth in a Wednesday interview.

The lender reported net revenue was up 2% to 7.6 billion euros in the second quarter, while efficiency savings reached 1.5 billion euros.

Revenue reports varied across the business. At its investment bank division, a recent area of strength, they jumped 10% year-on-year to 2.6 billion euros — but fell 3% to 2.1 billion euros in fixed income and currencies. Revenue in corporate banking was nearly flat at 1.9 billion euros.

Other highlights included:

Profit before tax excluding the Postbank provision was 1.7 billion euros, up from 1.4 billion euros in the second quarter of 2023.

Provision for credit losses was 476 million euros, up from 401 million euros a year ago.

CET 1 capital ratio, a measure of bank solvency, nudged up to 13.5% from 13.4% in the first quarter of the year.

In a Wednesday note, Citi analysts called it a “solid quarter,” with some divisions above consensus, net interest margins fading at a slower pace than initially expected and a largely-unchanged outlook for 2024 and 2025.

RBC analysts labelled the results “good,” particularly in investment banking, but said loan losses were higher than expected.

Deutsche Bank’s Von Moltke told CNBC he saw several positive drivers for the second half, including in net interest income — which fell 2% in corporate banking the second quarter, according to the Wednesday earnings.

“We had called earlier this year on the net interest income side for a downdraft relative to [20]23, we actually think the banking book segments may be stable, essentially flat to last year, and that’s actually very encouraging, reflecting lower funding costs, better spreads on both the deposit and the loan side. Still more sluggish loan growth than we’d like to see, but overall an encouraging picture,” Von Moltke said.

“On the financial market and corporate finance side, we see the momentum there coming through that we’d hoped to see,” he added, pointing to revenue doubling in its origination and advisory business year-on-year.

The second-quarter result maintains a recent trend of earnings beats for the lender. Back in April, the bank posted 10% higher profit, logging its best quarterly result for the metric since 2013.

It also comes on a busy day for European bank earnings, with Italy’s UniCredit maintaining a 14-quarter profit streak as Spain’s Santander reported a 20% leap in net profit.

— CNBC’s Ganesh Rao contributed to this story.
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July 23, 2024
French stocks rise 0.5% after left-wing coalition clinches surprise election win

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LONDON — French stocks moved higher on Monday as markets reacted to a surprise win for the left in the country’s parliamentary election.

The CAC 40 erased earlier losses to rise 0.5% by 10:00 a.m. London time (5 a.m. ET). The euro was flat against the dollar, and trading in bond markets was also relatively muted.

The U.K.’s FTSE 100 was steady, while Germany’s DAX was 0.43% higher and the FTSE MIB was up around 1%. The pan-European STOXX 600 was 0.3% in the green.

France’s left-wing New Popular Front won the largest number of seats in this weekend’s parliamentary elections, scuppering an expected surge for the far-right. However, the coalition failed to secure an absolute majority, early data showed, leaving markets digesting the possibility of a hung parliament.

François Digard, head of French equity research at Kepler Cheuvreux, said a hung parliament was what the market was expecting.

“You have a hung parliament as expected so last week, the market has played this out … It was just expected to be more right-wing and at the end it is left-wing,” he told CNBC on Monday.

Deutsche Bank strategists added that markets will be suspicious of the New Popular Front’s “fiscally aggressive” spending and taxation plans.

“Last night the far-left were already talking about wealth taxes and increases on taxes on corporates which won’t be market-friendly. However trying to build a government that has any kind of stability looks a very high bar this morning. Political paralysis for the next 12 months seems the most likely outcome,” they added.

It comes after a general election in Britain last week, in which the opposition Labour Party win a landslide victory, unseating the Conservatives after 14 years.

In corporate news, soft drinks maker Britvic has agreed a takeover bid of £3.3 billion ($4.2 billion) from Carlsberg, at an offer of 1,290 pence per Britvic share. This was an improved bid from Carlsberg which first offered 1,200 pence per share but was rejected.

There are no major corporate earnings due out on Monday. It’s also quiet on the data front, with just German trade data due.

In Asia-Pacific, stocks were mixed Monday. In the United States, futures ticked lower as investors looked ahead to inflation data for hints on this year’s market rally and the next steps by the Federal Reserve. The June consumer price index is due Thursday, with producer price index data due Friday.

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July 8, 2024
Trump ally Nigel Farage elected to British parliament for first time

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Reform UK leader Nigel Farage waves after being elected to become MP for Clacton at the Clacton count centre in Clacton-on-Sea, eastern England, early on July 5, 2024.

Henry Nicholls | Afp | Getty Images

LONDON — Populist lawmaker Nigel Farage on Friday won his first-ever seat in the U.K.’s parliament as he looks to shake up the country’s politics with his right-wing Reform UK party.

The win by the Brexit proponent follows seven failed attempts to become a member of the British parliament, although he has served as a (pro-Brexit) member of the European Parliament.

“My plan is to build a mass national movement over the course of the next few years and hopefully be big enough to challenge the general election properly in 2029,” Farage said after the result was announced.

The result comes amid a surprisingly strong election performance by Reform UK, which has a hardline stance on immigration. Exit polls indicate that the party could secure up to 13 parliamentary seats — quite the feat given that it failed to win any in the 2019 vote — although the final result may fall short of this.

It follows a U-turn by Farage who had previously declared he would not stand as an MP in this election, choosing instead to focus on helping U.S. former President Donald Trump’s campaign.

However, just last month Farage announced a surprise return to Reform UK and agreed to become its leader. The news gave the party a huge bump in popularity, with polls showing it was closing in on the ruling Conservatives.

Euroskeptic Farage is best known for campaigning — successfully — for the U.K. to leave the EU. He led the UK Independence Party (UKIP) before forming the Brexit Party which eventually turned into Reform.

By 3:56 a.m. local time on Friday, Reform had won three seats, although 402 constituencies were yet to report. The party had also performed well in terms of vote share, securing 15.9% of the vote behind the Conservatives with 22% and Labour at 37.7%.

According to Carsten Nickel, managing director at U.S. corporate advisory firm Teneo, this means Farage has “really helped Labour,” which is expected to win a huge landslide victory in the election.

“He has spit the Conservative vote, so the massive losses that we see on the Conservative side, that, to a large degree, is due to Nigel Farage stepping on the scene with his Reform party.”

Earlier in the evening, Farage posted a video posted on X titled: “The revolt against the establishment is underway.”

“We’re going to win seats, many, many seats,” he said. “Mainstream media are in denial, just as much as our political parties.”

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July 4, 2024
Slovakian Prime Minister Fico injured in shooting, media reports say

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Prime Minister of Slovakia Robert Fico attends a press conference during a Special European Council Meeting on April 18, 2024 in Brussels, Belgium.

Pier Marco Tacca | Getty Images News | Getty Images

Slovakia’s populist Prime Minister Robert Fico on Wednesday was injured in a shooting and taken to hospital, according to multiple media reports.

Fico, 59, was reported to have been shot and wounded in the abdomen after a government meeting, Reuters reported, citing Slovak news agency TASR.

CNBC could not independently verify this information. Slovakian President Zuzana Čaputová “strongly” condemned the “brutal and ruthless attack” in a Google-translated Facebook post, without supplying further details of the nature of the attack.

A person is detained after a shooting incident of Slovak PM Robert Fico, after a Slovak government meeting in Handlova, Slovakia, May 15, 2024.

Radovan Stoklasa | Reuters

European leaders reacted with shock to the news and wished Fico well.

“I strongly condemn the vile attack on Prime Minister Robert Fico,” European Commission President Ursula von der Leyen said via social media platform X.

“Such acts of violence have no place in our society and undermine democracy, our most precious common good. My thoughts are with PM Fico and his family,” she added.

Hungarian Prime Minister Viktor Orban said he was “deeply shocked by the heinous attack” against Slovakia’s Fico.

“We pray for his health and quick recovery! God bless him and his country!” Orban said via X.

German Chancellor Olaf Scholz said news of “the cowardly assassination attempt on Slovakian Prime Minister Fico has shocked me greatly.”

“Violence must have no place in European politics. At this time, my thoughts are with Robert Fico, his family and the citizens of Slovakia,” Scholz said via a Google-translated post on X.

Security officers move Slovak PM Robert Fico in a car after he was injured in a shooting incident, after a Slovak government meeting in Handlova, Slovakia, May 15, 2024.

Radovan Stoklasa | Reuters

Czech Prime Minister Petr Fiala described the news of Fico’s shooting as “shocking” and said he wished Slovakia’s prime minister will “get well as soon as possible.”

“We must not tolerate violence, it must have no place in society,” Fiala said in a Google-translated post via social media platform X.

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May 15, 2024
UK economy emerges from recession with 0.6% growth in first quarter

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Commuters in London.

Jason Alden/Bloomberg via Getty Images

The U.K. economy has emerged from recession as gross domestic product rose 0.6% in the first quarter, official figures showed Friday, beating expectations.

Economists polled by Reuters had forecast growth of 0.4% on the previous three months of the year.

The U.K. entered a shallow recession in the second half of 2023, as persistent inflation continued to hurt the economy.

Although there is no official definition of a recession, two straight quarters of negative growth is widely considered a technical recession.

The U.K.’s production sector expanded by 0.8% in the period from January to March, while construction fell by 0.9%. On a monthly basis, the economy grew by 0.4% in March, following 0.2% expansion in February.

In output terms, the services sector — crucial to the U.K. economy — grew for the first time since the first quarter in 2023, the Office for National Statistics said. The 0.7% growth was mainly driven by the transport services industry which saw its highest quarterly growth rate since 2020.

U.K. Prime Minister Rishi Sunak, whose Conservative Party recently suffered significant losses at local elections, welcomed the news. “The economy has turned a corner,” he said in a post on social media platform X.

“We know things are still tough for many people, but the plan is working, and we must stick to it,” Sunak added.

Suren Thiru, economics director at ICAEW, a professional group for chartered accountants, struck a more measured tone. He said the positive impact of weaker inflation could be curtailed by a renewed caution to spend amid political uncertainty ahead of general elections expected later this year.

“The UK’s escape from recession is a rather hollow victory because the big picture remains one of an economy struggling with stagnation, as poor productivity and high economic inactivity limits our growth potential,” said Thiru.

The Bank of England’s Monetary Policy Committee on Thursday warned that indicators of persistent inflation “remain elevated,” and voted to keep its main interest rate at 5.25%.

The central bank forecast headline inflation close to 2% in the near-term, but said it expects an increase slightly later in the year as the effects of a sharp fall in energy prices wear off.

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May 9, 2024
UBS shares pop 8% as Swiss bank returns to profit after Credit Suisse takeover

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UBS logo is seen at the office building in Krakow, Poland on February 22, 2024.

Jakub Porzycki | Nurphoto | Getty Images

UBS on Tuesday reported a swing back to profit after two quarterly losses as it smashed first-quarter expectations, with results bolstered by higher wealth management revenues.

Shares were 8.9% higher at 8:48 a.m. London time, returning some of April’s losses. UBS shares soared 51.7% last year but have had a more lackluster start to 2024.

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

The Swiss banking giant is continuing to process the mammoth integration of its former rival. The firm said Tuesday that it expects to complete the merger of UBS AG and Credit Suisse AG into a single U.S. intermediate holding company in the second quarter, and the merger of its Swiss entities in the third quarter.

Group revenue in the first quarter totaled $12.74 billion, also higher than expected and up from $10.86 billion in the fourth quarter of 2023. Revenue in its flagship Global Wealth Management unit rose 28% to $6.14 billion.

The bank’s CET1 capital ratio, a measure of liquidity, was 14.8%, compared to 14.4% the previous quarter.

“We are very pleased because we are making very good progress in our integration plans,” UBS CEO Sergio Ermotti told CNBC’s Silvia Amaro on Tuesday.

The bank meanwhile returned to strong reported net profitability and underlying profitability while strengthening its capital, Ermotti said, adding that there was “still work to be done for the rest of the year.”

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May 6, 2024
Barclays swings back to profit in first quarter amid strategic overhaul
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Signage shines through a window reflecting Barclays head office in Canary Wharf, London, U.K.

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LONDON — Barclays on Thursday reported first-quarter net income attributable to shareholders of £1.55 billion ($1.93 billion), beating expectations and returning the British lender to profit amid a major strategic overhaul.

Analysts polled by Reuters had expected net profit attributable to shareholders of £1.29 billion for the quarter, according to LSEG data.

Pre-tax profits, however, were down 12% to £2.28 billion from $2.6 billion a year earlier, as the bank braces to implement its extensive revamp plans.

Here are some other highlights:

First-quarter group revenue was £6.95 billion, down 4% from the same period last year.

Credit impairment charges were £513 million, compared with £524 million in the first quarter of 2023.

Common equity tier one (CET1) capital ratio, a measure of bank’s financial strength was 13.5%, down from 13.8% in the previous quarter.

Full-year return on tangible equity (RoTE) was 12.3%.

Quarterly total operating expenses were up 2% year-on-year at £4.2 billion.

Barclays reported a net loss of £111 million in the fourth quarter of 2023 due to an operational shake-up designed to reduce costs and improve efficiencies.

CEO C.S. Venkatakrishnan said the bank’s first-quarter results showed it was committed to implementing its overhaul plans, including via further investment in its U.K. consumer business and through its acquisition of Tesco Bank, which expected to complete in the fourth quarter of this year.

“We are focused on disciplined execution of the plan that we presented at our Investor Update on 20th February,” he said in a statement.

The revamp plans included a £900 million hit due to structural cost-cutting measures, which the bank said were expected to lead to gross cost savings of around £500 million in 2024, with an expected payback period of less than two years.

The overhaul saw the reorganization of the business into five operating divisions, separating the corporate and investment bank to form: Barclays U.K., Barclays U.K. Corporate Bank, Barclays Private Bank and Wealth Management, Barclays Investment Bank and Barclays U.S. Consumer Bank.

The bank also pledged to return £10 billion to shareholders between 2024 and 2026 through dividends and share buybacks.

— CNBC’s Elliot Smith contributed to this report.
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April 24, 2024
Deutsche Bank shares up 6% after first-quarter profit beat, investment banking recovery
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Deutsche Bank shares were 6% higher on Thursday afternoon after the German lender reported a 10% rise in first-quarter profit, beating expectations amid an ongoing recovery in its investment banking unit.

Net profit attributable to shareholders was 1.275 billion euros ($1.365 billion) for the period, ahead of an aggregate analyst forecast of 1.23 billion euros for the period, according to LSEG data.

Deutsche Bank said this was its highest first-quarter profit since 2013. It also marks the bank’s 15th straight quarterly profit.

Group revenue rose 1% year-on-year to 7.8 billion euros, which the bank attributed to growth in commissions and fee income, along with strength in fixed income and currencies. The revenue print also came in ahead of an analyst forecast of 7.73 billion euros, according to LSEG.

Revenues at its investment bank increased 13% to 3 billion euros, following a 9% slump through full-year 2023 which had dragged down overall profit. The performance restores the division as Deutsche Bank’s highest-earning unit on growth in financing and credit trading revenue.

Other first-quarter highlights included:

Net inflows of 19 billion euros across the Private Bank and Asset Management divisions.

Credit loss provision was 439 million euros, down from 488 million in the fourth quarter of 2023.

Common equity tier one (CET1) capital ratio — a measure of bank solvency — was 13.4%, compared to 13.6% at the same time last year.

“There’s momentum in the businesses, actually across all four businesses, and we do think it’s sustainable,” Deutsche Bank Chief Financial Officer James von Moltke told CNBC’s Annette Weisbach on Thursday.

“We’re delivering on our commitments on costs and capital returns in the quarter.”

Germany’s biggest lender reported net profit of 1.3 billion euros in the prior quarter and of 1.16 billion euros in the first quarter last year.

In 2023, the bank announced it would cut 3,500 jobs over the coming years, as it targets 2.5 billion euros in operational efficiencies to boost profitability and increase shareholder returns.
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April 24, 2024
Lagarde says ECB will cut rates soon, barring any major surprises; notes ‘extremely attentive’ to oil

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European Central Bank President Christine Lagarde on Tuesday said the central bank remains on course to cut interest rates in the near term, subject to any major shocks.

Lagarde said the ECB would monitor oil prices “very closely” amid elevated fears of a spillover conflict in the Middle East. However, since Iran’s unprecedented air attack on Israel over the weekend, she said the oil price reaction had been “relatively moderate.”

Her comments come shortly after the central bank gave its clearest indication to date that it could start cutting interest rates during its June meeting.

“We are observing a disinflationary process that is moving according to our expectations,” Lagarde told CNBC’s Sara Eisen on the sidelines of the IMF Spring Meetings.

“We just need to build a bit more confidence in this disinflationary process but if it moves according to our expectations, if we don’t have a major shock in development, we are heading towards a moment where we have to moderate the restrictive monetary policy,” Lagarde said.

“As I said, subject to no development of additional shock, it will be time to moderate the restrictive monetary policy in reasonably short order,” she added.

The ECB on Thursday held interest rates steady at a record high for the fifth consecutive meeting, but signaled that cooling inflation means it could begin trimming soon.

In a shift from previous language, the ECB said “it would be appropriate” to lower its 4% deposit rate if underlying price pressures and the impact of previous rate hikes were to boost confidence that inflation is falling back toward its 2% target “in a sustained manner.”

The central bank had previously made no direct reference to loosening monetary policy in its prior communiques.

Asked whether a June rate cut might be followed by subsequent reductions, Lagarde replied, “I have been extremely clear on that and I have said deliberately we are not pre-committing to any rate path.”

“There is huge uncertainty out there. … We have to be attentive to those developments, we have to look at the data, we have to draw conclusions from those data.”

Lagarde declined to comment when asked whether three ECB rate cuts this year was a reasonable expectation for market participants.

Policymakers and economists have zeroed in on June as the month when rates could start to be reduced, after the ECB trimmed its medium-term inflation forecast. Price rises in the euro zone have since cooled more than expected in March.

Asked about the central bank’s confidence in inflation continuing to fall in the wake of rising commodity prices, particularly should oil prices spike amid geopolitical tensions, Lagarde replied, “All commodity prices have an impact, and we have to be extremely attentive to those movements.”

“Clearly on energy and on food, it has a direct and rapid impact,” she added.

‘Biggest risks stem from geopolitics’

Earlier on Tuesday, ECB policymaker Olli Rehn said that the prospects for a June rate cut hinge upon inflation falling as expected, noting that the biggest risks to the ECB’s monetary policy stem from Iran-Israel tensions and the ongoing Russia-Ukraine war.

“As summer approaches we can start reducing the level of restriction in monetary policy, provided that inflation continues to fall as projected,” Rehn, who serves as the governor of the Bank of Finland, said in a statement.

“The biggest risks stem from geopolitics, both the deteriorating situation in Ukraine and the possible escalation of the Middle East conflict, with all their ramifications,” he added.

Israeli forces have pledged to respond to Iran’s large-scale air attack on Israel on Saturday. World leaders have called for the “utmost degree of restraint” in the aftermath of the weekend attack, amid fears of an escalation of the conflict in the Middle East.

Speculation that the ECB could soon start cutting rates comes even as investors have slashed their bets on Federal Reserve rate reductions. Traders now ascribe a 20% likelihood of a Fed rate cut in June, after yet another inflation print showed consumer prices remain sticky.

— CNBC’s Jenni Reid contributed to this report.

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April 16, 2024