European stocks swung between small gains and losses on Tuesday, with traders digesting a mixed bag of economic data and a deluge of corporate news.
Italian stocks advanced as talks between two anti-establishment parties continued.
What are markets doing?
The Stoxx Europe 600 index SXXP, +0.02% slipped 0.1% to 391.91, set for a second straight day of losses.
Italy’s FTSE MIB index I945, +0.07% rose 0.4% to 24,317.54 as traders continued to watch developments in Italian politics.
What’s driving markets?
The indecisive trading action came after a raft of economic data. Eurozone gross domestic product numbers met expectations, while German economic sentiment figures missed forecasts. In the U.K., the unemployment rate remained at a 42-year low.
Meanwhile, Italian politics remained in focus. Last minute hiccups have emerged in the plans by the populist Five Star Movement and League parties to form a coalition, with the main sticking point appearing to be who to nominate to the role of prime minister.
What are strategists saying?
“Some very radical populist ideas are being floated [in Italy] such as flat income tax at 15% (League) and guaranteed income for the poor (Five Star). These ideas will not sit well in Brussels or the bond market,” said economists at Danske Bank in a note on Tuesday.
“In terms of market reaction , after years of fear over a populist government in Italy, the bond market reaction has the distinct air of nonchalance. Italian bond yields have risen only moderately over other periphery or core debt,” they added.
The yield on 10-year Italian government bonds TMBMKIT-10Y, +0.72% was up 0.2 basis points at 1.918% on Tuesday.
Shares of Vodafone Group PLC VOD, -2.56% VOD, -1.39% dropped 2.5% after the telecom giant said its chief executive Vittorio Colao will step down and be succeeded by Chief Financial Officer Nick Read, effective Oct. 1.
EasyJet PLC EZJ, +2.88% rose 3.4% after the budget airline said its pretax loss for the first half of fiscal 2018 narrowed, driven by record revenue a reduction in capacity by other airlines.
The German ZEW economic sentiment stayed at negative -8.2 in May, missing forecasts of a negative 7.8 reading.
Staying in Germany, gross domestic product for the first quarter expanded 1.6% year-on-year, below forecasts of a 1.7% reading and down from 2.3% in the previous quarter.
GDP in the eurozone grew 0.4% quarter-on-quarter, confirming the preliminary reading.
In France, the statistics agency Insee lifted its estimate of 2017 GDP growth to 2.2% from the 2% estimated previously.
In the U.K., the Office for National Statistics said the unemployment rate remained at 4.2% in March, while wages excluding bonuses rose 2.9%.