CNBC Pro: Earnings at these 5 global banks will stay high despite ECB rate cut, says Berenberg
Despite the interest rate cut expected this week, earnings at a handful of big European banks will remain strong, according to Berenberg.
One of the lender’s shares could rise by more than 40% over the next 12 months, according to the investment bank.
CNBC Pro subscribers can read more here.
– Ganesh Rao
German factory orders data falls short of expectations ahead of ECB decision
The European Central Bank will make its decision on a day of weaker-than-expected data from the eurozone’s biggest economy, Germany.
New industrial orders in Germany temporarily fell 0.2% from last month, the federal statistics office said. Economists polled by Reuters had previously expected an increase of 0.5%.
Orders decreased by 1.6% on an annual basis.
New orders in April 2024 fell in four manufacturing branches due to the significantly lower number of large-scale orders compared to the previous month, the statistics office said.
New orders rose 2.9% in April from March, excluding traditionally more volatile large-scale orders.
– Sophie Kiderlin
There has been a ‘strong signal’ that the ECB will cut rates multiple times this year, economist says.
European Central Bank policymakers are set to cut interest rates on Thursday as the path forward for inflation looks reassuring, Shaan Raithatha, senior economist at Vanguard Europe, told CNBC’s “Squawk Box Europe” on Thursday. He added that multiple such rate cuts are on the horizon for 2024.
“Besides the light momentum in services inflation in recent months, it appears the ECB has enough conviction to continue later today,” he said. “The outlook for inflation looks promising.”
ECB policymakers have also sent a “strong signal” that there will be further interest rate cuts beyond what is expected on Thursday, Raithatha said.
– Sophie Kiderlin
Former ECB president Jean-Claude Trichet on the prospect of rate cuts in Europe
The European Central Bank is likely to look to the latest “bad news” on inflation to cut interest rates in June, but may opt for just one more cut this year, said Jean-Claude Trichet, the central bank’s former president. European, for CNBC’s “Squawk on.” Road” on Tuesday.
“My intuition is that they will pull the trigger and cut rates by 25 percentage points, even if there has been some bad news … in terms of the goal, which is to stabilize prices and reduce inflation,” he said. Trichet.
The bad news includes recent increases in headline inflation, core inflation and services inflation, as well as negotiated wage increases in the first quarter of the year.
The good news is that unemployment in the eurozone is at a historic low and PMI figures point to a continued economic recovery, he added.
“We have to admit that data can [change] month to month or quarter to quarter, so we need to be prudent… based on actual data, rather than guessing [the ECB] would decrease [interest rates] two times after June, it is more reasonable to think about a reduction in rates”, said Trichet.
“But again that’s my central intuition, it could change. We could have a lot of better news in terms of inflation and we could have more bad news,” he added.
– Jenny Reid
European Central Bank won’t make successive rate cuts, but plenty of room to ease, economist says
Azad Zangana, senior European economist and strategist at Schroders, told CNBC on Tuesday that he sees the ECB continuing with its tapering in June and then opting for reductions in alternative meetings for the rest of the year.
That would mean a total of three cuts implemented this year, with back-to-back cuts in September and December, according to forecasts in a recent Reuters poll of economists.
– Jenny Reid
