European shares dip before ECB decision and BP investors mull shock CEO exit

European shares closed lower on Wednesday as investors positioned themselves in advance of a European Central Bank (ECB) rates decision and followers of oil giant BP were left reeling after the shock exit of its Irish chief executive.

The financial markets are pricing in an almost 64 per cent chance the ECB will raise rates by 0.25 of a percentage point on Thursday afternoon, up from around 40 per cent on Monday.

BP lost 2.8 per cent after chief executive Bernard Looney resigned on Tuesday evening with immediate effect after failing to fully disclose details of past personal relationships with colleagues.

The pan-European Stoxx 600 index dipped 0.3 per cent.

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DUBLIN

The Iseq All Share index declined by 0.7 per cent to 8,498.20. Kingspan fell by 2.7 per cent to €68.30, bringing its decline so far this week to 7.2 per cent, since it emerged that the insulation giant had made an approach to buy US construction materials company Carlisle that had been rebuffed.

Smurfit Kappa was also in focus, rising 0.7 per cent to €32.40 to recover some of the ground lost on Tuesday when investors considered the terms of the paper packaging giant’s merger agreement with US peer WestRock.

Banking stocks were mixed in advance of the ECB decision, with AIB rising 1.1 per cent to almost €4, while Bank of Ireland declined by 1.2 per cent to €8.74 and Permanent TSB dipped 0.5 per cent to €2.09.

Datalex slid 6.5 per cent as the travel retail software company revealed that Virgin Australia had pulled a plug on a contract to overhaul the airline’s retail offering after it decided to end the programme.

LONDON

London’s FTSE 100 was flat after data showed July economic output contracted at the fastest pace this year, sparking recession concerns, while a boost from Aviva offset some declines from earlier in the session.

The exporter-heavy index ended a choppy session unchanged at 7,525.99 points, snapping a four-day rally.

British economic output contracted by a larger-than-expected 0.5 per cent in July from June, data showed, worse than what economists had forecast in a Reuters poll that pointed to a 0.2 per cent retreat in gross domestic product (GDP).

The data underlined signs that the economy is weakening, perhaps by more than the Bank of England (BoE) had expected in advance of its policy meeting on September 22nd, where the central bank is expected to raise interest rates by a quarter of a point to 5.5 per cent.

“Rate hikes may be biting more, consumer resilience to squeezed income may have weakened, and/or global trends may be dragging more,” said Robert Wood, UK economist at BofA Global Research.

“This cuts upside risks to our call for only one more 25 basis point rate hike, and modestly raises the risk of a September pause.”

Aviva jumped 4.6 per cent as it said it was quitting its Singlife joint venture, selling its 25.9 per cent stake in Singapore Life Holdings and two debt instruments to Sumitomo Life for a combined £800 million (€931 million)

EUROPE

The industrial sector dipped 0.8 per cent as Alstom lost 3.9 per cent after Barclays initiated coverage on the French industry and infrastructure manufacturer’s stock with an underweight rating, which is the equivalent of a sell.

Shares of wind turbine makers Siemens Energy, Vestas and Nordex rose in the range of 1.3 per cent and 5.3% after European Commission president Ursula von der Leyen said the European Union will put forward a package of measures to support the EU’s wind power industry.

Bayer fell 4.6 per cent after JP Morgan placed the German drugs-to-pesticides group on negative catalyst watch.

NEW YORK

Wall Street’s main indexes were ahead in early afternoon trading as data showing a moderate increase in consumer prices in August cemented bets the Federal Reserve could leave interest rates unchanged in September.

Major megacap growth stocks including Tesla, Meta Platforms, Microsoft and Amazon gained.

Ford jumped on plans to double the production of its hybrid F-150 pickup trucks in 2024.

Citigroup rose 1.6 per cent after chief executive Jane Fraser announced a big management reorganisation that will result in more job cuts and give her greater direct oversight over the company as she seeks to simplify its structure.

– Additional reporting, Reuters