EUROPE MARKETS: European Stocks End With A Whimper, But Log Weekly Win
October 21 2016 - 11:34AM
Dow Jones News
By Carla Mozee, MarketWatch
Euro trading around March lows
European stocks finished flat Friday, with some indexes easing
from multimonth highs as investors waded through corporate reports
while they considered European Central Bank President Mario
Draghi's hint toward the possibility of more monetary stimulus.
The Stoxx Europe 600 index finished unchanged at 344.29 after
zigzagging between small gains and losses throughout the session.
Technology, telecom, financial and commodity shares moved up, while
consumer shares, health care, utility and industrial issues
fell.
European indexes that fell included Portugal's PSI 20 index ,
closing down 0.2% at 4,726.43. Investors waited for a decision,
expected late Friday, on whether ratings agency DBRS would cut the
country from an investment grade rating.
DBRS is the last of four agencies to hold Portugal at investment
grade, and a downgrade could led Portugal to lose access to the
ECB's bond-buying program, resulting in higher funding costs for
the country and financial institutions.
The yield on Portugal's 10-year bond fell 2 basis points to
3.17% as prices rose.
For the week, the Stoxx 600 ended higher by 1.3%.
Policy path: The pan-European index on Thursday reversed losses
(http://www.marketwatch.com/story/european-stocks-slip-as-ecb-caution-creeps-in-2016-10-20)
after Draghi said the bank's quantitative easing program won't come
to a "sudden stop". Policy makers at this week's meeting didn't
discuss either way whether to end the program or extend it beyond
March, he said.
French and German blue-chip indexes on Thursday closed at their
highest in six weeks after Draghi's comments. On Friday in Paris,
the CAC 40 shed 0.1% at 4,536.07. In Frankfurt, the DAX 30 barely
dodged a loss.
"There is not a clear direction yet as to what is going to
happen to the ECB's monetary policy. The enthusiasm has waned and
now were looking for the next piece of information that will
confirm a direction," said Nicolas Shamtanis, chief market analyst
at EasyMarkets.
The prospect of further stimulus left the euro on Friday trading
at its lowest since March. It bought $1.0868, down from $1.0929
late Thursday.
Equity markets still hold the potential to gain ground until the
ECB clarifies its position, which will most likely happen in
December, said Shamtanis. Gains would "mainly stem from the euro's
weakness as Europe is a very export-oriented [region]," he
said.
"That being said...there are a lot of things that could hinder
such an advance. We have concerns about capitalization of European
banks ... the Italian referendum on the fourth of December, and
Brexit, of course," he added. "So it's a very fragile time to be an
investor in equities. However, as long as the euro drops further
... the upside [for stocks] is more probable than a correction at
these levels."
For the euro, the door is currently "open for a drop to $1.0820
and in the medium-to-long-term horizon, $1.05 seems to be the next
support the euro is heading toward," he added. The key factor
determining the euro's direction is the interest-rate differential
between the U.S. and the eurozone, which is expected to widen
further if the Federal Reserve raises rates in December, Shamtanis
said.
Movers: British American Tobacco PLC shares (BATS.LN) fell 2.7%.
They had been higher for much of the day after the Lucky Strike
cigarettes maker proposed buying the stake in Reynolds American Inc
(http://www.marketwatch.com/story/bat-in-47-billion-offer-for-reynolds-stake-2016-10-21).
(RAI) that it doesn't already own for $47 billion.
Burberry shares (BRBY.LN) (BRBY.LN) rose 3.1% following a report
the British luxury-goods maker may merge with Coach Inc
(http://www.marketwatch.com/story/coach-burberry-shares-jump-after-report-on-potential-20-billion-merger-2016-10-21).(COH)
in a $20 billion deal.
Ericsson AB shares (ERIC) dropped 5.9% after the Swedish
telecom-equipment maker swung to a third-quarter loss
(http://www.marketwatch.com/story/ericsson-plunges-to-loss-hit-by-asia-competition-2016-10-21)
of 233 million Swedish kronor ($26.2 million), hurt by a slowdown
in the market.
Valeo SA shares (FR.FR) climbed 3% after the auto parts supplier
raised its full-year 2016 operating-margin target to around 8%.
Outside of the Stoxx 600, 3-D printing firm Arcam AB (ARCM.SK)
closed 3.6% lower following news that General Electric Co.'s (GE)
move to buy the company looks set to fail
(http://www.marketwatch.com/story/ges-3-d-printing-buys-set-to-fail-after-activist-elliott-intervenes-2016-10-21-81032344).
Indexes: Germany's DAX 30 index turned higher to end up 0.1% at
10,710.73. The 10,800 area represents a "a huge technical
resistance and a break at that level would open the way to revisit
11,000-plus levels," which haven't been seen since November 2015,
said Shamtanis.
Spain's IBEX 35 rose 0.4% to 9,100.40 and the U.K.'s FTSE 100
index shed 0.1% at 7,020.47.
The pound traded at $1.2231, down from $1.2252 late
Thursday.
(END) Dow Jones Newswires
October 21, 2016 12:19 ET (16:19 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
FTSE 100
Index Chart
From Apr 2024 to May 2024
FTSE 100
Index Chart
From May 2023 to May 2024