Europe markets close lower as political concerns weigh; IAG slips 2.3% on BA disruption
European bourses closed lower on Tuesday amid investor concerns over the likelihood of a potential snap election in Italy.
The pan-European Stoxx 600 ended down 0.19 percent with most sectors and major bourses in negative territory. The FTSE 100 closed 0.28 percent lower on Tuesday. While the German DAX and French CAC 40 slipped down 0.24 and 0.5 percent respectively.
Banking stocks were among the worst-performing sectors following remarks by ECB (European Central Bank) President Mario Draghi and a Deutsche Bank research note. Both stated that European banks no longer had support from a valuation perspective, and growth in the euro area is set to fade.
Specifically, Italian banks were under pressure as concerns over an upcoming election intensified. Banco Bpm led the losses in this sector as its shares contracted more than 2.3 percent.
The telecoms sector was also moving below the flatline. Proximus dropped more than 2 percent following a downgrade by Raymond James.
Looking at individual stocks, International Airlines Group fell nearly 2.5 percent. This is after an IT crash at British Airways disrupted flights over the bank holiday weekend.
Elsewhere, Akzo Nobel dropped almost 2 percent after a Dutch court supported the firm's dispute with Elliott Management. The U.S. firm is said to be disappointed and considering its "next steps".
Meanwhile, in the U.S., the Dow Jones industrial average and broader S&P 500 index both continued trading slightly lower as investors assessed a slew of fresh economic data after a holiday weekend.
Politics and data
The euro was under pressure after Draghi signaled Monday that it is still too early to consider ending monetary stimulus. Furthermore, Greece's finance minister said Monday that its creditors have to reach an agreement on debt relief measures at a meeting next month, to support the nation's return to bond markets; Reuters reported.
Meanwhile, former Italian Prime Minister Matteo Renzi said over the weekend that it seemed appropriate – from a European point of view – for the nation to hold its next election at the same time as Germany, with the latter set to take place in September 2017.
On Monday, British Prime Minister Theresa May and opposition leader Jeremy Corbyn outlined their proposals on a Brexit deal, with May reiterating comments that no deal with the EU is better than a bad deal, while Corbyn ensured a deal would happen if Labour won the election.
In terms of data, euro zone businesses seemed less upbeat about the outlook for their companies in May, despite the outcome of the French election. The European Commission's economic sentiment indicator dropped to 109.2 in May from 109.7 in April.
