Italian banks drag European bourses lower at early trade
European stock markets were lower Tuesday morning, after a market rally following a new North American Free Trade Agreement (NAFTA) faded.
The pan-European Stoxx 600 was down around 0.55 percent during early morning deals, with almost all sectors and major bourses in negative territory.
Europe’s banking index led the losses shortly after the opening bell, down over 1.2 percent after a prominent Italian lawmaker said Rome would enjoy more favorable economic conditions outside the euro zone.
Claudio Borghi, a euroskeptic economist who chairs the budget committee of the lower house of Italy’s parliament, said in a radio interview Tuesday that he was “truly convinced” most of the country’s problems would be solved if it had its own currency.
Borghi’s comments were quickly contradicted by Italy’s deputy prime minister, Luigi Di Maio, who said said Italy’s coalition government did not want to leave the European Union or the single currency. Nonetheless, several of Italy’s banks were trading lower on the news. Unicredit, Ubi Banca and Banco Bpm were Europe’s worst sectoral performers, down more than 2.8 percent Tuesday morning.
Looking at individual stocks, Britain’s Royal Mail slumped to the bottom of the European benchmark after the postal service company issued a profit warning on Monday. Shares of Royal Mail fell over 6 percent on the news.
Meanwhile, Ubisoft surged towards the top of the index after Google announced Monday it planned to test a game-streaming service alongside the company. Shares of Ubisoft were up over 1.6 percent.
Market focus is largely attuned to global trade developments, after the U.S. and Canada forged a last-gasp deal on Sunday to revamp NAFTA as a trilateral pact with Mexico. The accord rescued a $1.2 trillion open-trade zone that had been about to collapse after almost quarter of a century.
In Asia, cautious views on the global economy appeared to hamper risk appetite. MSCI’s broadest index of Asia-Pacific shares, excluding Japan, fell 1 percent after a steady start to the session.
China’s financial markets are closed this trading week, as the country observes a national holiday.
Back in Europe, investors continued to monitor corporate earnings, with Britain’s Ferguson scheduled to release full-year results on Tuesday.