EUROPE MARKETS: European Stocks Rally On U.S. Tax-reform Optimism With Banks In Charge
December 18 2017 - 4:15AM
Dow Jones News
By Sara Sjolin, MarketWatch
Thales and Gemalto jump after takeover deal
European stocks rose for the first time in four session on
Monday, with banks leading the charge north on hopes the highly
anticipated tax reform in the U.S. will get passed this week and
provide a boon for the financial sector.
Eurozone inflation data for November due later in the morning
were also in focus.
What are markets doing: The Stoxx Europe 600 index rallied 0.9%
to 391.48, setting it on track for its highest close since Dec.
12.
Among regional benchmarks, Germany's DAX 30 index jumped 1.2% to
13,257.68, while France's CAC 40 index put on 1.2% to 5,414.37.
The U.K.'s FTSE 100 index climbed 0.5% to 7,529.85.
The euro rose to $1.1788 from $1.1748 late Friday in New York.
The fetched $1.3354, up from $1.3322 on Friday.
What's driving the market: Fears that the Republicans would
struggle to pass their major tax reform bill eased on Friday after
11th concessions made to the final version managed to appease the
holdouts. Sens. Bob Corker of Tennessee and Marco Rubio of Florida
both pledged their support for the bill, sparking optimism the
final vote could come before Christmas.
Speaking on several Sunday talk shows, Treasury Secretary Steven
Mnuchin said he has "no doubt"
(http://www.marketwatch.com/story/mnuchin-says-no-doubt-congress-will-pass-tax-bill-this-week-2017-12-17)
that the GOP's tax bill will make it to the desk of President
Donald Trump this week.
Expectations of tax cuts in the U.S. have been a major factor
behind the stock market rally stateside, with the optimism spilling
over to the European market as well. Particularly banks are likely
to get a windfall from the reform, potentially benefiting Europe's
large international financial institutions with substantial
business in the U.S. The Stoxx Europe 600 Banks Index was up 0.7%
on Monday.
What are strategists saying: "Investor optimism that Trump will
score his first legislative victory since becoming President lifted
stocks and is teeing up the markets for a strong Monday," said
Jasper Lawler, head of research at London Capital Group, in a
note.
"Up until Friday's publication, the extent to which individual
U.S. firms would benefit from the tax reform bill was unclear. With
the details now released, clear winners from the tax code will be
U.S firms which have high tax rates and mainly U.S. based revenues.
So, the likes of banks, airlines and oil refineries are expected to
be big beneficiaries," he added.
Stock movers: Shares of Thales SA (HO.FR) jumped 8.3% and
Gemalto NV (GTO.AE) added 5.5% after news Thales will buy the Dutch
security company for EUR4.8 billion ($5.66 billion)
(http://www.marketwatch.com/story/thales-to-buy-chip-maker-gemalto-for-56-billion-2017-12-18).
Buwog AG (BWO.VI) soared 18% after Germany's Vonovia SE (VNA.XE)
made a cash offer to acquire the Austrian property company in a
EUR5.2 billion euro deal
(http://www.marketwatch.com/story/vonovia-offers-to-buy-buwog-in-61-billion-deal-2017-12-18).
Green energy companies rose after the Republican tax bill
released late Friday preserved tax credits for the wind and solar
energy. Shares of Vestas Wind Systems AS (VWS.KO) gained 5.1% and
Siemens Gamesa Renewable Energy SA (SGRE.MC) advanced 1.8%.
EasyJet PLC (EZJ.LN) slipped 0.5% after the discount airline
said it has snapped up part of Air Berlin PLC's
(http://www.marketwatch.com/story/easyjet-buys-part-of-air-berlin-operations-2017-12-18)(AB1.XE)
operations at Berlin Tegel airport. Air Berlin shares were up
32%.
Shares of IG Group Holdings PLC (IGG.LN) tumbled 9.2% after
flagging concerns over the European Securities and Markets
Authority's tighter-than-expected clampdown on the sector.
Economic news: At 10 a.m., the final reading on eurozone
inflation for November is due, expected to confirm the flash
reading of 1.5%.
(END) Dow Jones Newswires
December 18, 2017 05:00 ET (10:00 GMT)
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