EUROPE MARKETS: Banks Lead European Stocks Higher After Fed Hints At Rate Hike
September 21 2017 - 12:26PM
Dow Jones News
By Carla Mozee, MarketWatch
After Fed decision, regional bank index jumps to one-month
high
European stocks ended mostly higher on Thursday, with banks
stocks marching higher after the U.S. Federal Reserve indicated it
will continue to raise official interest rates.
The Stoxx Europe 600 index rose 0.2% to 382.88, closing at its
highest level since July 20. On Wednesday, the benchmark closed
fractionally lower
(http://www.marketwatch.com/story/european-stocks-mark-time-as-investors-stay-focused-on-fed-decision-2017-09-20)
as investors marked time before the highly anticipated Fed policy
announcement.
After European trade closed Wednesday, the Fed said it would
begin to shrink its huge $4.5 trillion balance sheet in October
(http://www.marketwatch.com/story/feds-yellen-says-low-inflation-a-mystery-but-not-mysterious-enough-to-keep-rates-low-2017-09-20).
The U.S. central bank also signaled plans for one more increase in
interest rates before the end of 2017, which should lift borrowing
costs for auto loans, mortgages and business loans. Fed policy
makers also hinted at another three rate increases in 2018.
The prospect of higher interest rates bolstered bank stocks on
Wall Street and in Europe, where the Stoxx Europe 600 Bank Index
charged up 1.4% to a more-than one-month high.
In that index, Deutsche Bank AG (DBK.XE) (DBK.XE) popped up
2.7%, Société Générale SA (GLE.FR) picked up 2.2% and Banco
Santander SA (SAN) moved up 1.2%.
"Before the Fed announced its decision, there were high
expectations that monetary policy makers would drag interest rate
expectations lower for 2017," said Hussein Sayed, chief market
strategist at FXTM.
"Instead, the U.S. central bank decided to look past low
inflation and said the harm of the hurricanes would have no lasting
economic impact," he said in a note, referring to damage from
recent Hurricanes Harvey and Irma.
Sayed said markets have higher expectations for an interest-rate
increase in December, with investors now seeing a 70% chance of a
hike, up from 50% before the Fed decision.
Stock movers: Elsewhere in the banking group, shares of
Commerzbank AG (CBK.XE) rallied 3.5%, extending gains Wednesday
following a Reuters report
(https://uk.reuters.com/article/uk-unicredit-merger-commerzbank-exclusiv/exclusive-italys-unicredit-signals-interest-in-deal-with-germanys-commerzbank-sources-idUKKCN1BV1XS)
that Italy's UniCredit SpA (UCG.MI) is interested in merging with
the state-backed lender. But the German government favors
Commerzbank tying up with France's BNP Paribas SA (BNP.FR), Reuters
reported Thursday. BNP shares bulked up 1%, while UniCredit shares
ended 2% higher.
CRH PLC (CRG.DB) shares gained 2.4%. The Irish building
materials supplier plans to buy Ash Grove Cement Co
(http://www.marketwatch.com/story/crh-agrees-to-buy-ash-grove-cement-in-35-billion-deal-2017-09-21).(ASHG)
in a deal valuing the U.S. cement provider at $3.5 billion, the
companies said.
Capita PLC shares (CPI.LN) plunged 12% after the outsourcing and
professional services company posted a 26% fall in pretax profit
for the first half of the year
(http://www.marketwatch.com/story/capita-profit-falls-26-but-trading-in-line-2017-09-21).
It did say that trading was broadly in line with expectations.
Ryanair Holdings PLC (RYAAY) erased an earlier loss to close up
0.1%, after a group of the air carrier's pilots on Wednesday
reportedly rejected a cash bonus
(http://www.bbc.co.uk/news/business-41342309) to work extra days
after Ryanair's cancellation of more than 2,000 flights.
Johnson Matthey PLC (JMAT.LN) surged 15% after the catalyst
maker revealed plans to tap into the electric car battery
market.
Indexes: Germany's DAX 30 index rose 0.3% to 12,600.03, and
France's CAC 40 index picked up 0.5% to 5,267.29.
The U.K.'s FTSE 100 index fell 0.1% to 7,263.90. Spain's IBEX 35
advanced 0.1% to 10,297, after closing 1.2% lower on Wednesday as
Spanish police arrested 13 Catalan officials
(http://www.marketwatch.com/story/catalan-officials-arrested-in-spain-ahead-of-banned-independence-vote-2017-09-20)
in a battle over a regional independence referendum.
The euro bought $1.1951, up from $1.1895 late Wednesday in New
York. The dollar had earlier pushed higher against major rivals
after the Fed's plans to wind down its bond-buying program.
Read:Don't call the German election boring--it could be huge
leap or setback for the eurozone
(http://www.marketwatch.com/story/dont-call-the-german-election-boring-it-could-mean-a-huge-shift-for-the-eurozone-2017-09-18)
(http://www.marketwatch.com/story/dont-call-the-german-election-boring-it-could-mean-a-huge-shift-for-the-eurozone-2017-09-18)Also
read:German election: Who's Merkel up against and what are their
chances?
(http://www.marketwatch.com/story/german-election-whos-merkel-up-against-and-how-could-they-shape-the-new-government-2017-08-31)
(END) Dow Jones Newswires
September 21, 2017 12:11 ET (16:11 GMT)
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