European stocks closed lower as investors await key earnings; JDE Peet jumps 16%
European markets closed lower on Monday as investors awaited key corporate earnings and monitored elevated Middle East tensions.
The pan-European Stoxx 600 closed around 0.7%, with most major bourses and almost all sectors in negative territory. Insurance stocks led the losses, down 1.1%, while oil and gas stocks rose 0.6%.
In corporate news, German software company SAP will report its highly anticipated third-quarter earnings on Monday evening. Investors are likely to scrutinize the results after a report from the Dutch semiconductor firm ASML lastweek triggered aroutintechmarket stocks.
Looking at individual stocks, shares of JDE Peet’s rose more than over 16% Monday. It comes after investment holding company JAB said it would acquire Mondelez’s 86 million shares in the Netherlands-based company.
US remains engine of global growthinlatestIMFforecasts
The U.S. economy will continue to provide most of thethrustforglobalgrowththroughthebalanceof this year and in 2025, led by robust consumer spending that has held up through a wrenching bout of inflation and the high interest rates used to tame it, the International Monetary Fund said on Tuesday.
InitslatestWorldEconomicOutlook,theIMFraised its 2024 and 2025 economic growth forecasts for the U.S. - the only developed economy to see its outlook marked up for both years - and its chief economist said the "soft landing" sought by the Federal Reserve in which inflation eases without big damage to the job market had largely been achieved.
Emerging market powerhouses India and Brazil also stood out on the upside of the IMF forecasts, while it dialed back growth expectations for China for this year and left next year's forecast for the world's No. 2 economy at a below-trend 4.5%.
Still, it warned that risks abound from armed conflicts, potential new trade wars and the hangoverfromthetightmonetarypolicyemployed by the Fed and other central banks to rein in inflation.
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Source: https://www.cnbc.com/2024/10/21/european-markets-live-updates-stocks-news-dataand-earnings.html
NY Fed says banks obscuring commercial real estate risks by extending loan terms
Banks have been tweaking the terms of commercial real estate mortgages to obscure losses, and in delaying the day of reckoning, are increasing risks to the broader financial system, a paper, opens new tab released Wednesday by the Federal Reserve Bank of New York said.
The commercial real estate sector, or CRE, has been under heavy pressure from the pandemic and its aftershocks. Lockdowns and the widespread rise of remote working has reduced the need for office buildingsandsimilarstructures,andthusfar,thesector has shown few signs of recovery. On top of that aggressive Fed rate rises between the spring of 2022 and July 2023 further pressured banks.
“Banks ‘extended-and-pretended’ their impaired CRE mortgages in the post-pandemic period to avoid writing off their capital, leading to credit misallocation and a buildup of financial fragility,” the study’s authors wrote, adding problems associated with this lending could arise quickly.
Fed officials have been bracing for some level of manageable trouble among the banks that do CRE loans but have broadly argued that whatever issues arise will likely be modest, concentrated in smaller banks and slow moving, as financial institutions navigate the troubled landscape.
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