Europe Stocks Quiet Ahead of BOE Update -- 2nd Update
May 11 2017 - 7:08AM
Dow Jones News
By Riva Gold
Stocks were off to a quiet start Thursday as investors parsed
mixed corporate results ahead of an update from the Bank of
England.
The Stoxx Europe 600 edged down 0.1% late morning, brushing off
modest gains across Asia. Futures suggested the S&P 500 would
pull back 0.2% from a record high.
Later Thursday, the Bank of England is expected to leave its
rates unchanged before a U.K. national election in June. The BOE's
inflation report, vote, and comments will be closely watched,
however, for any hints at a change in projections for growth and
inflation, as investors assess the chance of an interest rate rise
next year.
"I think there is a huge divergence in inflation outlooks at the
moment, " said Markus Stadlmann, chief investment officer at Lloyds
Private Bank, who expects the committee to remain in wait-and-see
mode for now.
The European Commission on Thursday raised its U.K. growth
forecasts for the second time in six months, but the British pound
was last down 0.2% at $1.2913 following disappointing industrial
production figures.
In European stocks, the telecom and utilities sectors led
declines in morning trading, with shares of Spanish
telecommunications giant Telefónica and the U.K.'s BT Group PLC
lower after releasing earnings figures. Shares of UniCredit SpA
climbed 4.7%, however, after the Italian lender posted a
first-quarter net profit after a large fourth-quarter loss.
Miners and oil and gas companies outperformed the rest of the
market as oil and metals prices recovered. Crude prices logged
their biggest daily gains since December on Wednesday, and Brent
crude oil added another 1.5% to $50.98 a barrel on Thursday. Copper
futures climbed 1.6% to $5,600 a ton, while gold rose 0.3% to
$1,222 an ounce.
In the U.S., stock futures indicated modest losses on Wall
Street following a raft of earnings reports. Shares of Snap Inc.
tumbled after Wednesday's close after its first quarterly report as
a public company showed it struggled to maintain user growth.
Shares of technology companies had led gains in U.S. stocks so far
this year by a wide margin.
"Its results weren't dramatically worse than people were
expecting... if companies like Snap don't deliver on growth
expectations, these stocks get punished very quickly and hard,"
said Mr. Stadlmann.
"I think tech stocks will continue to be a sector rich in
opportunity, but you probably have to be more selective than
anywhere else," he said.
Shares of Whole Foods Market, Inc. climbed meanwhile ahead of
the market open, after the grocery chain said it would dramatically
reshape its board.
Major U.S. stock indexes have barely moved in recent sessions,
hovering around all-time highs just as implied and realized
volatility have collapsed. Shares have been supported by a mostly
upbeat first-quarter earnings season and continued signs of
strength in the U.S. and global economy.
"Right now, there's a sense that things are pretty good
economically and from an earnings perspective, and that should
continue" said Brad McMillan, chief investment officer at
Commonwealth Financial Network. "Investors are more willing to move
into the market, and less skittish to downturns."
Among clients, "we're starting to see retail investors wanting
to take more risk," he added.
Earlier, Japan's Nikkei Stock Average rose 0.3%, Hong Kong's
Hang Seng Index added 0.4%, Australia's S&P/ASX 200 added 0.1%
and South Korea's Kospi was on track for a fresh record.
The Shanghai Composite rose 0.3%, recovering from earlier losses
that sent it to a seven-month low. In China, a note was posted on
an official WeChat account run by the state-owned Securities Times,
saying the country's stock regulator summoned brokers with large
capital pools for a meeting on Monday to ease concerns about a
crackdown in the shadow-banking sector. The regulator clarified
that the crackdown is targeted at nonstandard assets and doesn't
include bonds.
In currencies, the New Zealand dollar fell sharply against the
greenback after a central-bank policy statement was interpreted as
dovish. The euro was flat at $1.0872 as the European Union raised
this year's growth forecast for the European economy.
The WSJ Dollar Index, which tracks the dollar against a basket
of 16 currencies, was otherwise flat, while 10-year U.S. Treasury
yields dipped to 2.394% from 2.414%. Yields move inversely to
prices.
Kenan Machado,
Yifan Xie
, Paul Hannon, Georgia Wells and P.R. Venkat contributed to this
article.
Write to Riva Gold at riva.gold@wsj.com
(END) Dow Jones Newswires
May 11, 2017 06:53 ET (10:53 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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