EUROPE MARKETS: European Stocks Gain Ground As Euro Drifts Lower
August 30 2016 - 11:45AM
Dow Jones News
By Carla Mozee, MarketWatch
K+S shares gain; parent of retailer Primark upgraded
European stocks pushed higher Tuesday, with shares in exporters
rising in response to a weaker euro, as investors prepared for the
possibility of a U.S. interest rate hike in September.
The Stoxx Europe 600 index rose 0.6% to 345.12, gaining traction
after listless action at the open. All sectors were higher except
for the utilities and basic materials groups. The index on Monday
shed 0.2%
(http://www.marketwatch.com/story/european-stocks-slump-as-yellens-rate-hike-message-sinks-in-2016-08-29).
The German and French indexes were outperforming the
pan-European benchmark on Tuesday. Frankfurt's DAX 30 index was up
1.2% to 10,670.80, while the CAC 40 index in Paris rose 1% to
4,469.90.
Among individual stocks on those indexes, German auto maker
Volkswagen AG (VOW.XE) (VOW.XE) was up 2.1% and French car maker
Peugeot SA (UG.FR) tacked on 1.9%.
At the same time, the euro fell against the U.S. dollar, at
$1.11451 from $1.1186 late Monday. European exporters such as auto
makers tend to benefit when the euro weakens, as it makes their
products less expensive to buy for holders of other currencies.
The greenback has advanced since Federal Reserve Chairwoman
Janet Yellen said late last week that the case for a U.S. rate hike
has strengthened.
At this point, sentiment "in the stock markets...remains
positive despite a slightly more hawkish Federal Reserve. This is
mainly because...central banks elsewhere are pretty much dovish,
most notably in Japan, the eurozone and now the U.K.," wrote Fawad
Razaqzada, market analyst at Forex.com.
"A small rate rise in the U.S. would not be the end of the world
anyway, though it may put further upward pressure on dollar. This
in turn should translate into stronger USD/JPY and weaker EUR/USD
exchange rates," he said.
"Consequently, the export-oriented stock markets in Japan and
Germany could start to outperform the U.S. going forward, provided
that Friday's U.S. jobs report does not put to bed talks of a 2016
rate rise once and for all."
The European Central Bank will release its own policy
announcement on Thursday next week. Ahead of that, "there's been
more narrative" about the prospect of the ECB extending its
corporate-bond purchasing program, said Tony Cross, market analyst
at Trustnet Direct.
"That could be driving sentiment," Cross said.
Movers: Shares of German potash and specialty fertilizer group
K+S AG (SDF.XE) climbed 3.8% following a Bloomberg report that
Potash Corp (POT) and Agrium Inc. (AGU.T) are preparing a merger
agreement. Potash last October dropped its pursuit of K+S.
Wirecard AG shares (WDI.XE) pushed up 3.5% after Barclays raised
its rating on the payment processing services company to overweight
from equalweight.
Associated British Foods PLC (ABF.LN), which runs sugar
operations and the retailer Primark, was upgraded to outperform
from sector perform at RBC. Shares were up 3.4%.
Other indexes: Italy's FTSE MIB picked up 1.4% to 16,900.27.
Bank shares on the index were gaining, including at 2.4% rise in
UniCredit SpA (UCG.MI). Spain's IBEX 35 gained 1.1% to
8,706.80.
In London, the FTSE 100 was down 0.1% at 6,833.78
(http://www.marketwatch.com/story/ftse-100-seesaws-with-miners-under-pressure-after-holiday-2016-08-30).
Data: German inflation unexpectedly slowed to a rate of 0.3% in
August on the year, dragged mainly for a pullback in energy prices.
Analysts polled by FactSet had expected a rate of 0.5%.
A final reading of minus 8.5 of European consumer confidence in
August from the European Commission met market expectations.
(END) Dow Jones Newswires
August 30, 2016 11:30 ET (15:30 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
FTSE 100
Index Chart
From Mar 2024 to Apr 2024
FTSE 100
Index Chart
From Apr 2023 to Apr 2024