EUROPE MARKETS: European Stocks Log Worst Daily Drop In 3 Weeks As Euro Rallies
July 21 2017 - 12:51PM
Dow Jones News
By Carla Mozee, MarketWatch
Stoxx 600 finishes the week with a 1% decline
European stocks suffered their worst daily fall in three weeks
Friday, weighed by strength in the euro, as the flow of corporate
quarterly results failed to provide a lift.
The Stoxx Europe 600 was slammed lower by 1% to 380.16.
Industrial, tech and the oil-and-gas put in particularly weak
performances, as crude-oil prices slumped and as the enthusiasm for
technology shares cooled following a sharp, recent rebound for that
sector.
CMC Markets' markets analyst David Madden in a Friday research
note attributed the downdraft in the market to "the strong euro,"
which "took its toll on Continental markets."
The Stoxx 600 ended the week with a 1.9% decline overall.
Friday's fall represents the worst single-session decline for the
pan-European equity gauge since June 29, 2017, according to FactSet
data. Meanwhile, London's FTSE 100 notched
(http://www.marketwatch.com/story/ftse-100-edges-up-reaches-for-a-weekly-win-2017-07-21)1%
advance for the week.
Euphoric euro: The euro traded at a two-year high against the
dollar, buying $1.1678, extending gains from Thursday when the
shared currency settled at its strongest level since Jan. 15, 2015
(http://www.marketwatch.com/story/euro-sits-at-2-year-high-as-hawkish-view-on-ecb-dominates-2017-07-21).
Investors sent the euro flying even as European Central Bank
President Mario Draghi struck a dovish tone about monetary policy
when he spoke during the previous session.
"The fear the European Central Bank will discuss the possibility
of trimming its bond buying scheme later this year has driven
investors to dump their eurozone equities. To make matter worse,
the relative strength of the euro is making eurozone stocks more
expensive," said Madden.
Draghi said policy makers will discuss its bond-buying program
in "autumn," but he didn't say whether that meant the ECB's
September policy meeting. The ECB buys EUR60 billion a month of
government bonds and other assets.
"Stock markets across Continental Europe have been flooded with
money over the past few years because of the extremely aggressive
monetary policy of the European Central Bank, and now the cash is
making its way out of the region, and dragging the London market
lower with it," Madden added.
Read:Nobody told the euro that Mario Draghi was dovish
(http://www.marketwatch.com/story/nobody-told-the-euro-that-mario-draghi-was-dovish-2017-07-20)
The euro briefly pared gains during Friday's session after the
ECB's survey of economists showed they, on average, reduced
expectations for inflation for this year and the next two years, by
0.1 percentage points each. Inflation should rise to 1.5% in 2017,
to 1.4% in 2018 and 1.6% in 2019, the survey showed. Subdued
inflation has been viewed by some as a telltale signal that the
eurozone economy isn't yet firing on all cylinders--a point that
Draghi tried to drive home during a news conference on Thursday
following the ECB's policy statement.
Stock movers: Investors had more corporate financial updates to
sort through on Friday.
Shares of Philips Lighting NV (LIGHT.AE) tumbled 6.9% after the
Dutch company posted a decline in second-quarter sales to 1.70
billion euros and a fall in comparable sales. Profit, however, was
higher.
Meanwhile, Valeo SA shares (FR.FR) sank 6.9% as the French
car-parts manufacturer's first-half sales increased to EUR9.46
billion, but still fell short of expectations of EUR9.56 billion
from a Reuters survey of analysts.
On the upside, Vodafone (VOD.LN) picked up 0.5% after the
mobile-phone services provider reiterated its earnings outlook for
the full year
(http://www.marketwatch.com/story/vodafone-revenue-drops-on-forex-effects-2017-07-21).
Meanwhile, Paysafe Group PLC (PAYS.LN) leapt 6.8% after the
British electronic-payments company said Friday it received a
possible all-cash buyout offer
(http://www.marketwatch.com/story/paysafe-lands-all-cash-offer-from-blackstone-cvc-2017-07-21)
from funds managed by Blackstone and CVC Capital Partners. The bid
represented an 8.9% premium to Thursday's closing price of GBP5.42
a share.
Individual indexes: The U.K.'s FTSE 100 ended the session off
0.5% at 7,452.91.
(http://www.marketwatch.com/story/ftse-100-edges-up-reaches-for-a-weekly-win-2017-07-21)
France's CAC 40 index dropped 1.6% to 5,117.66. In Frankfurt,
the DAX 30 index , which is heavily weighted by exporters, dropped
1.7% to 12,240.06, also marking its worst daily drop since June
29.
Spain's IBEX 35 fell 1.3% at 10,426.60, and Italy's FTSE MIB
declined 1.1% to close at 21,202.16.
(END) Dow Jones Newswires
July 21, 2017 13:36 ET (17:36 GMT)
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