EUROPE MARKETS: European Stocks Veer Lower As Fed Rate-hike Doubts Hurt Bank Shares
August 17 2017 - 4:44AM
Dow Jones News
By Carla Mozee, MarketWatch
ECB minutes on deck; Vestas Wind, Hikma shares slammed lower
European stocks fell Thursday, with bank shares dragged down by
doubts about another U.S. interest rate hike in 2017, while
investors waited for more details about the policy discussion
officials at the European Central Bank had last month.
The Stoxx Europe 600 index fell 0.3% to 378.11, led by losses
for financial and oil and gas shares. Utility and health care
names, however, were higher. A decline Thursday would be the
benchmark's first in four sessions. It finished Wednesday's session
higher by 0.7%
(http://www.marketwatch.com/story/european-stocks-bounce-toward-3rd-straight-rise-2017-08-16),
aided in part by the euro weakening.
Investors on Thursday swung their attention to the Federal
Reserve, as minutes from the central bank's July meeting released
late Wednesday raised the prospect the Fed may not raise interest
rates again this year
(http://www.marketwatch.com/story/some-fed-members-say-bank-can-be-patient-on-interest-rates-due-to-low-inflation-2017-08-16).
The minutes showed officials engaged in an intense debate about the
path of U.S. inflation after a run of unexpectedly low
readings.
The Stoxx Europe 600 Bank Index dropped 0.9% on the dimmer
rate-hike outlook, as many European banks have operations in the
U.S. and higher rates can aid net interest margin. Among European
lenders, shares of Deutsche Bank AG (DBK.XE) fell 1.8%, Banco
Santander SA (SAN) lost 1.4%.
ECB minutes on deck: The Fed minutes will be followed by the
ECB's July meeting minutes, due at 12:30 p.m. London time, or 7:30
a.m. Eastern Time.
There have been expectations the ECB will start winding down its
aggressive monetary stimulus efforts as eurozone growth and
inflation picked up earlier this year. Investors were eager to hear
what ECB President Mario Draghi would say about that when he
appears at the Fed's symposium in Jackson Hole, Wyo., next
week.
But a Reuters report on Wednesday
(https://uk.reuters.com/article/uk-ecb-policy-draghi-idUKKCN1AW0LL),
citing ECB sources, said Draghi wouldn't deliver any new policy
messages at the conference.
"At the latest ECB meeting, [Draghi] clearly stated that a
discussion on tweaks to QE should take place in the "autumn",
suggesting we are likely to get some signals on stimulus changes
either in September or October," said Marios Hadjikyriacos,
research analyst at IronFX, in a note.
"Although a lot will depend on incoming data, we maintain our
view that a likely scenario is that the bank removes its QE easing
bias at the September meeting, thereby laying the groundwork for a
formal announcement in October that the pace of QE purchases may be
reduced by the turn of the year," he wrote
The euro fetched $1.1736 compared with $1.1768 late Wednesday in
New York.
Read:ECB hints at no hawkish shift at Jackson Hole
(http://www.marketwatch.com/story/euro-slides-after-ecb-hints-at-no-hawkish-shift-at-jackson-hole-2017-08-16)
Also read:The pound is 'extremely undervalued' right now,
according to UBS
(http://www.marketwatch.com/story/the-pound-is-extremely-undervalued-right-now-according-to-ubs-2017-08-16)
Stock movers: Vestas Wind Systems A/S sank 11% after
second-quarter earnings at the Danish wind-turbine maker missed
expectations
(http://www.marketwatch.com/story/vestas-earnings-miss-forecasts-to-buy-back-shares-2017-08-17).
The company did said it is launching a new share buyback
program.
Hikma Pharmaceuticals PLC (HIK.LN) tumbled 12% after the company
lowered its revenue guidance
(http://www.marketwatch.com/story/hikma-sees-tough-competition-in-generics-market-2017-08-17)
in expectation of tougher competition facing its generics
division.
Novo Nordisk A/S (NOVO-B.KO) rose 2.9% after the company said
its semaglutide treatment for diabetes in a late-stage clinical
trial met its primary endpoint of cutting down glucose levels.
Indexes: Germany's DAX 30 index fell 0.2% to 12,225 and France's
CAC 40 index fell 0.2% to 5,166. The U.K.'s FTSE 100 index was off
0.2% at 7,419.
(END) Dow Jones Newswires
August 17, 2017 05:29 ET (09:29 GMT)
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