European markets close mixed; EU commission ups inflation forecast; BBVA falls 4.2%

European stock markets traded mixed on Monday, with the benchmark Stoxx 600 index closing 0.2% higher.

The U.K.’s FTSE 100 gained 0.3%, boosted by mining and financial stocks, while Germany’s DAX and France’s CAC 40 finished near the flatline.

Ozan Ozkural of Tanto Capital Partners discusses Turkey’s elections and says if President Recep Tayyip Erdogan loses, the country’s foreign policy wouldn’t change, but its monetary policy “will have to readjust into market norms.”

Mike Harris, founder of Cribstone Strategic Macro, says anyone who went with “naked long Turkey” before the election results was “basically taking a view on the polls,” which tend to be “really erratic.”

The major averages ticked higher in early trading. The Dow rose about 20 points. The S&P 500 and Nasdaq advanced 0.1% each.

— Fred Imbert

Corrado Passera, CEO of illimity Bank, discusses the contrast between the U.S. and European banking systems.

Treasury Secretary Janet Yellen said over the weekend negotiations were making progress on a debt ceiling deal.

“I’m hopeful. I think the negotiations are very active. I’m told they have found some areas of agreement,” said Yellen in an interview with the Wall Street Journal on Saturday from Japan during a meeting of G-7 finance ministers.

President Joe Biden and House Speaker Kevin McCarthy are expected to meet early this week, CNBC has reported. The Treasury Department said the U.S. may not be able to meet its financial obligations as early as June 1.

—John Melloy

Shares of Siemens Energy gained as much as 4% in morning trade after the German company reported record orders and forecast-beating sales in the second quarter.

Siemens Energy also lifted its revenue outlook as its order book surpassed the 100 billion euro ($109 billion) mark.

Sales for the months January to March were up 24% from the precious year at 8 billion euros, and the group now anticipates revenue to grow between 10% and 12%, up from its initial 3-7% forecast.

— Hannah Ward-Glenton

Alban de Mailly Nesle, CFO of AXA, discusses the insurance company’s first-quarter earnings and discusses its pricing strategy as it looks to overcome macroeconomic challenges.

The European Commission, the executive arm of the EU, raised its forecasts for inflation in the region and warned of tighter financing conditions.

In its latest economic forecasts, the Brussels institution estimated inflation will reach 5.8% this year and 2.8% in 2024 for the euro area. This is well above the European Central Bank’s target of 2%.

As a result, the commission now expects the ECB to continue its rate hiking cycle, which in turn could deteriorate lending conditions across the region.

“As inflation remains high, financing conditions are set to tighten further. Though the ECB and other EU central banks are expected to be nearing the end of the interest rate hiking cycle, the recent turbulence in the financial sector is likely to add pressure to the cost and ease of accessing credit, slowing down investment growth and hitting in particular residential investment,” the European Commission said in a statement.

Back in March, several smaller U.S. banks came under pressure off the back of higher interest rates. The cascade of rescues stateside raised questions about the stability of the banking system and whether more lenders will succumb to the pressure of rate increases.

European officials have stressed that European banks are well capitalized and under tighter regulatory controls. Nonetheless, in an environment of higher interest rates, borrowers might struggle to respect credit repayments.

The European Commission also said that there’s better growth prospects for the region, revising upward its GDP estimates. It now expects growth in the EU to reach 1% this year versus 0.8% expected about three months ago, and to hit 1.7% in 2024 rather than a previous forecast of 1.6%.

—Silvia Amaro

Turkey’s BIST-100 index saw a downturn of as much as 6% as markets opened, with investors responding to the uncertainty prompted by the country’s inconclusive presidential election results.

Turkey now faces an unprecedented runoff after neither 20-year incumbent Recep Tayyip Erdogan nor his rival, Kemal Kilicdaroglu, secured more than 50% of the vote.

— Hannah Ward-Glenton

The world’s platinum shortage will be worse than expected in 2023, according to the latest report by the World Platinum Investment Council.

The platinum deficit for 2023 will be around 983,000 ounces (983 koz), the WPIC report said, which is a 77% upward revision from ts last forecast in March.

Global demand for platinum will see a 28% uptick this year from the last, while supply will decrease 1% year on year.

— Hannah Ward-Glenton

European banking stocks are poised to outperform automakers in the foreseeable future, according to UBS.

The investment bank highlighted three structural changes that could drive significant gains for banking stocks over their automotive counterparts, despite similarities in their economic cycles.

CNBC Pro subscribers can read more about those three reasons here.

— Ganesh Rao

Bank of America strategists have named the ten European stocks that they believe are currently undervalued and could provide significant investment returns.

These picks, which the investment bank refers to as the “Beat Factor Top 10,” are primarily made up of industrial and financial companies.

One of the stocks offers more than 60% upside over the next 12 months, according to the investment bank.

CNBC Pro subscribers can read more here.

— Ganesh Rao

European markets are expected to open higher Thursday.

The U.K.’s FTSE 100 index is expected to open 38 points higher at 7,744, Germany’s DAX 83 points higher at 16,023, France’s CAC 35 points higher at 7,432 and Italy’s FTSE MIB 136 points higher at 27,084, according to data from IG.

Earnings are set to come from EasyJet, Burberry, BT, National Grid and Premier Foods. There are no major data releases.

— Holly Ellyatt