EUROPE MARKETS: European Stocks Revived As Euro Drops, But HSBC, BHP Billiton Updates Disappoint
February 20 2018 - 1:11PM
Dow Jones News
By Carla Mozee, MarketWatch
Euro falls on report European lawmakers are ready to break with
EU negotiators' position on Brexit
European stocks closed higher Tuesday, aided by a pullback in
the euro on news of a potentially favorable development for the
U.K. in its Brexit negotiations with the European Union.
But stocks did struggle during the session, with heavyweights
HSBC PLC and BHP Billiton PLC issuing downbeat financial results as
investors returned to the markets after holidays in the U.S. and
Asia.
How markets moved
The Stoxx Europe 600 index closed up 0.6% to 380.51. On Monday,
the benchmark lost 0.6%
(http://www.marketwatch.com/story/european-stocks-tilt-lower-after-strong-week-as-traders-search-for-cues-2018-02-19).
Germany's DAX 30 index jumped 0.8% to 12,487.90, and France's
CAC 40 advanced 0.6% to end at 5,289.86.
Spain's IBEX 35 gained 0.9% to finish at 9,895.30, but the
U.K.'s FTSE 100 ended down less than 1 point at 7,246.77.
Check out: More investors looking to cut U.K. assets as Brexit
uncertainty persists
(http://www.marketwatch.com/story/more-investors-looking-to-cut-uk-assets-as-brexit-uncertainty-persists-2018-02-16)
The euro bought $1.2354, down from $1.2407 late Monday in New
York. Against the pound , the euro fell roughly 0.5% to 0.8814
pence.
What drove markets
European stocks staged a turnaround as losses for the euro
against the dollar and the pound picked up pace during the session.
The moves came after a Business Insider report
(https://nordic.businessinsider.com/european-parliament-brexit-resolution-association-agreement-single-market-2018-2/)
said European lawmakers are ready to break with EU negotiators'
position on Brexit. The European Parliament is preparing a
resolution that would call for the U.K. to have single-market
access, according to the report.
A weaker euro can help shares of European exporters, whose
products become less expensive for overseas clients to purchase
when the shared currency's value declines.
European stocks earlier turned lower as investors appeared
hesitant to dive full-force into buying mode before the opening
bell on Wall Street, where investors were returning after Monday's
Presidents Day holiday. In Hong Kong, stocks fell as trading
resumed following the Lunar New Year holiday.
What strategists were saying
"The big move...was in the normally somnolent [euro/British
pound currency] pair, which slumped as reports hit that the EU
parliament was preparing it's own plan for the U.K.-EU
relationship, which would see the UK given special associate
status," said Chris Beauchamp, chief market analyst at IG.
"This kind of bespoke deal is exactly what the pair need, an
acknowledgment of their shared history and mutual dependency,"
Beauchamp said.
Stock movers
HSBC PLC shares (HSBA.LN) (HSBA.LN) dropped 3.1% after the
Asia-focused lender missed full-year profit expectations
(http://www.marketwatch.com/story/hsbc-misses-on-profit-on-steinhoff-carillion-hits-2018-02-20).
The bank's earnings were hit by the collapses of two borrowers:
U.K. services and construction company Carillion PLC and South
African retailer Steinhoff International Holdings .
BHP Billiton PLC (BLT.LN) (BHP.AU) (BHP.AU) was knocked down
4.6% as first-half profit before one-off items of $4.05 billion
came in below the $4.21 billion consensus estimate
(http://www.marketwatch.com/story/bhp-lifts-dividend-profit-falls-on-us-tax-hit-2018-02-20)
in a Wall Street Journal poll of analysts. But BHP said it would
raise its midyear payout by 38%.
InterContinental Hotels Group PLC shares (IHG) slumped 2.8%. The
company, whose brands include Crowne Plaza and Holiday Inn, said
"no additional capital return will be paid in calendar year 2018,"
so it may focus on growth plans. IHG's 2017 pretax profit was ahead
of expectations
(http://www.marketwatch.com/story/intercontinental-hotels-profit-up-lifts-dividend-2018-02-20)
and that it will raised its total dividend for the year.
Economic data
Economic sentiment in Germany declined in February but a
less-than-anticipated pace, according to the widely watched ZEW
survey. The economic sentiment measure came in at 17.8 points
(http://www.marketwatch.com/story/german-economic-sentiment-drops-in-february-zew-2018-02-20),
down from 20.4 in January but ahead of an estimate of 16.
"About two-thirds of the survey participants expect the
inflation rate in Germany and the entire euro area to increase in
the next six months," ZEW President Professor Achim Wambach said in
a statement.
(END) Dow Jones Newswires
February 20, 2018 12:56 ET (17:56 GMT)
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