Inflation, Italian banks in focus

The three major indexes were near flat at open.

The Dow, S&P 500 and Nasdaq Composite were all within 0.1% of their flatlines shortly after 9:30 a.m. ET.

— Alex Harring

Hiscox was the worst performer on the Stoxx 600 on Wednesday, with shares falling 9.5% after the British insurer reported a spike in profit but issued a mid-single digit growth outlook in for its retail business, slightly beneath market expectations.

Italian bank shares rebounded on Wednesday after the government watered down a surprise windfall tax on excess profits announced earlier this week.

Citi analysts estimated that the Monday announcement of a 40% tax on excess income derived from higher interest rates in 2023 would deal a 19% blow to Italian lenders’ net profits for the year.

Shares of BPER Banca, Banco BPM, Intesa Sanpaolo, Finecobank and UniCredit all fell sharply during Tuesday trading wiping out more than 9 billion euros from the market capitalization of the Italian banking sector.

In a bid to calm market jitters, the finance ministry on Tuesday night said it would cap the levy on net interest income at 0.1% of risk-weighted assets.

Finecobank shares recovered almost 8% by early afternoon on Wednesday, while Banco BPM and UniCredit both gained more than 4%, BPER Banca added 3% and Intesa Sanpaolo climbed 2.7%.

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– Elliot Smith

Max Kettner, chief multi-asset strategist at HSBC, says he’s staying cautious on European equities due to recession risk in the eurozone over the next quarters. That’s why the bank is underweight on European stocks and overweight on U.S. equities, he explained.

Shares in Delivery Hero jumped 7% in early trade to lead the Stoxx 600, after the German food delivery company raised its full-year revenue outlook and swung to a first-half profit.

Dutch bank ABN Amro fell 4% despite beating second-quarter profit expectations on the back of higher interest rates, with net interest income, fees and operating expenses all in line with expectations.

– Elliot Smith

The pan-European Stoxx 600 index added 0.7% in early trade, with mining stocks adding 1.5% to lead gains as almost all sectors and major bourses opened in positive territory. Travel and leisure stocks bucked the trend to fall 0.7%.

Britain’s FTSE 100 is seen around 39 points higher at 7,566, Germany’s DAX is set to add around 99 points to 15,874 and France’s CAC 40 is expected to gain around 61 points to 7,330, according to IG data.

Goldman has identified artificial intelligence as one of five themes in Asia-Pacific that it’s positive on.

Its screen picks out AI companies in Asia — in hardware, semiconductors and applications — that could benefit from rising AI demand.

CNBC Pro subscribers can read more here.

— Weizhen Tan