KBC Market Research Desk
KBC Bank
European shares lose up to 1% after opening higher. Sentiment gradually soured throughout the day. S&P downgrading several Italian banks and profit taking after an impressive 3‐day bull run can explain the move.
S&P downgraded 18 Italian banks saying that economic prospects in Italy are likely to be weaker than previously anticipated, which will erode banks’ asset quality and profitability and may lead to high credit losses over the next two years.
German consumer confidence is set to start the new year on a strong note, hitting its highest level in eight years, on hopes economic expansion in Europe’s largest economy will accelerate in the coming months, a sentiment survey showed this morning.
Reuters reports that ECB officials, who spoke on condition of anonymity, said that the ECB could require central banks in countries such as Greece or Portugal to set aside extra money or provisions to cover potential losses from any bond‐buying, reflecting the riskiness of their bonds. Such a move could help persuade a reluctant Germany to back plans to buy state bonds.
Later today, Fed Evans, Williams and Lacker are scheduled to speak. They are the first governors to bring more insight on this week’s FOMC decision.
This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.
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