European markets close lower as momentum falters; tech stocks hold gains

European stocks closed lower Wednesday, with the regional Stoxx 600 index down 0.43%.

The U.K.’s FTSE 100 fell after a five-day winning run, ending 0.06% lower, while Germany’s DAX and France’s CAC 40 were lower by 0.27% and 0.17%, respectively.

UBS shareholders on Wednesday afternoon approved changes to the bank’s Additional Tier 1 (AT1) bond system, protecting them from the kind of wipeout suffered by Credit Suisse AT1 bondholders last year as the bank collapsed.

The change moves the AT1 bonds, a form of debt that can be converted when a bank’s capital ratio falls below a certain level, to an equity conversion structure.

UBS had sought to make the debt instruments, also known as contingent convertibles or “CoCos,” more appealing in the wake of the Credit Suisse bondholder losses. The writedown was criticised by some.

The Swiss bank faces greater capital requirements due to its increased size following its acquisition of former rival Credit Suisse, and as domestic regulators push to make those requirements even more stringent.

UBS raised $3.5 billion in November from its first AT1 bond sale since the takeover.

Shares of UBS were 2.8% lower at 4 p.m. in London at their lowest level since Feb. 29.

In a separate development, U.S. hedge fund Appaloosa filed a lawsuit in a New Jersey court accusing the former Credit Suisse — now absorbed into UBS — of misleading investors before $17 billion of its bonds were written down, Reuters reported.

The news was reported by Bloomberg overnight Tuesday.

— Jenni Reid

Dutch semiconductor supplier ASM International topped the Stoxx 600 index in afternoon trade, up 11.8% at 3:40 p.m. in London.

In results published after the Tuesday close, the company reported higher revenue and net earnings, and raised its revenue forecast for the second quarter and the second half of 2024 as it said it expected a less extreme slowdown in China sales.

At the other end of the Stoxx, German drug company Evotec plunged 34% following the publication of its full-year 2023 results which showed an operating loss of 47.5 million euros, compared to 20.9 million euros operating profit the year before.

Evotec also announced the appointment of Christian Wojczewski as new chief executive officer from July, following the exit of longtime CEO Werner Lanthaler amid accusations of non-compliance with share trading disclosure rules.

Interim CEO Mario Polywka said the company’s 2024 aim was to “refocus… on profitable growth.”

— Jenni Reid

Technology stocks were higher shortly after the opening bell on Wednesday, helping lift the Nasdaq Composite for a third straight session.

The tech-heavy index climbed 0.57%, while the S&P 500 added 0.2%. The Dow Jones Industrial Average was the lone laggard, slipping 62 points, or 0.16%.

— Brian Evans

UBS Group Chairman Colm Kelleher used the Swiss banking giant’s Annual General Meeting on Wednesday to insist that the institution is “not too big to fail.”

Kelleher added that the bank was “seriously concerned” about Swiss government proposals for additional capital requirements on several systemically important banks, including UBS. He argued such proposals would curb Switzerland’s competitiveness as a financial center and increase European regulatory fragmentation.

“Trust cannot be regulated,” he said in a speech.

In a separate interview with CNBC, Johan Torgeby, chief executive of Swedish bank SEB, said he agreed with Kelleher’s argument on regulation.

“It is very clear that there is a worry overall about higher capital requirements,” Torgeby told CNBC’s “Street Signs Europe.”

“You can’t regulate trust, and trust is a personal point, comes from asking shareholders to depart from their hard-earned money, putting [it] into a bank like SEB, and then we lever that up. Often this is not well-understood, that the real capital provider of anything a bank does is its shareholders, and we need to remain and regain any potential trust that has been destroyed there,” he said.

— Jenni Reid

Shares of ASM International climbed 9.9% in morning trade after the Dutch semiconductor company raised its revenue forecast for the second quarter on Tuesday.

Meanwhile, Handelsbanken shares were down 10.7% after the Swedish bank’s first quarter earnings missed expectations.

— Karen Gilchrist

A June interest rate cut from the European Central Bank might not be followed by others, depending on how inflation develops, a policymaker said Wednesday.

Joachim Nagel, president of Germany’s Bundesbank, said that he would support a rate cut in June, if upcoming economic data increases the ECB’s confidence that inflation would soon return back to the 2% target.

“However, such a step would not necessarily be followed by a series of rate cuts,” he said in a speech at the DZ Bank Capital Markets Conference 2024. “Given the current uncertainty, we cannot pre-commit to a particular rate path.”

Nagel also expressed caution about the outlook for inflation, saying that it looks persistent in the services sector, as it is driven by “continued strong wage growth.” He also noted that core inflation remained high.

“I am not fully convinced yet that inflation will actually return to target in a timely and sustained manner,” he said.

— Sophie Kiderlin

Shares of French luxury group Kering sunk more than 9% at open on Wednesday, after the company warned that it expects a sharp downturn in first-half profits as a result of waning demand for its Gucci brand.

The stock was trading down 8.9% by 8:15 a.m. London time.

The group on Tuesday said that it anticipates a decline of 40% to 45% in first-half operating income, compared to the same period in 2023.

— Karen Gilchrist

European stocks opened slightly higher Wednesday, with the benchmark Stoxx 600 index up 0.1% by 8:10 a.m. London time.

The U.K.’s FTSE 100 climbed 0.4% after recording another record close Tuesday, while France’s CAC 40 was 0.1% lower, and Germany’s DAX up 0.2%.

The launch of Intel‘s latest artificial intelligence chip is expected to benefit three global semiconductor companies, according to Morgan Stanley.

Intel unveiled its third-generation AI accelerator, Gaudi 3, earlier this month. The semiconductor giant said the latest chip is twice as power-efficient and can run AI models one-and-a-half times faster than Nvidia‘s H100 GPU – the flagship product from the current AI chip market leader.

The three global semiconductor companies make various parts of the new AI chip for Intel.

CNBC Pro subscribers can read more here.

— Ganesh Rao

Gold and copper have been on fire, as geopolitical tensions mount, central banks buy up gold, and AI demand for copper grows.

Some fund managers and Wall Street analysts continue to be bullish on those commodities.

Here are some names they like.

CNBC Pro subscribers can read more here.

— Weizhen Tan

European markets are set to open in positive territory Wednesday, building on gains seen since the start of the week.

The U.K.’s FTSE 100 index is expected to open 40 points higher at 8,084, Germany’s DAX up 60 points at 18,201, France’s CAC 20 points higher at 8,130 and Italy’s FTSE MIB up 206 points at 34,331, according to data from IG.

Earnings come from Orange, Air Liquide, Iberdrola, Roche and Heathrow. Data releases include Germany’s Ifo Institute’s survey on business conditions and expectations for April.

— Holly Ellyatt