EUROPE MARKETS: European Stocks Struggle As HSBC, BHP Billiton Updates Disappoint
February 20 2018 - 6:00AM
Dow Jones News
By Carla Mozee, MarketWatch
Euro losses accelerate on report European lawmakers are ready to
break with EU negotiators' position on Brexit
European stocks drifted lower Tuesday, with heavyweights HSBC
PLC and BHP Billiton PLC issuing downbeat financial results as
investors return to the markets after holidays in the U.S. and
Asia.
Meanwhile, the losses in the euro picked up pace following a
report that the European Parliament is planning to propose
special-status relationship with Britain after the country exits
from the European Union.
How markets are moving
The Stoxx Europe 600 index was down 1 point at 378.18 as the
financial, basic materials and consumer services sectors fell, but
the industrial and utility sectors moved up. 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 was down nearly 6 points at 12,380.45,
and France's CAC 40picked up 0.1% at 5,260.10.
Spain's IBEX 35 gained 0.3% to 9,835.20, but the U.K.'s FTSE
100dropped 0.5% to 7,213.40.
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 eurobought $1.2351, lower than $1.2407 late Monday in New
York.
In the fixed-income market, the yield on the 10-year German bund
was up 2 basis points at 0.748%, according to Tradeweb. Yields rise
when prices fall.
What's driving markets
European stocks started modestly higher Tuesday, but the gains
were pared or they evaporated on major indexes as investors
appeared hesitant to dive full-force into buying mode.
The lackluster mood matched that overseas, as S&P 500
futures swayed between small gains and losses before the opening
bell on Wall Street, where investors are returning after Monday's
Presidents Day holiday. In Hong Kong, stocks lost ground as trading
resumed following the Lunar New Year holiday.
The euro was dropping against the dollar and the pound following
a Business Insider report
(https://nordic.businessinsider.com/european-parliament-brexit-resolution-association-agreement-single-market-2018-2/)
that the European Parliament is preparing a resolution that will
call for an "association agreement" with post-Brexit Britain,
representing a break from the position held by chief EU negotiator
Michel Barnier.
What strategists are saying
"Overall, dealers are still cautiously optimistic about the
health of European equities, and the acid test will be when the
U.S. markets re-open," said CMC Markets analyst David Madden in a
note.
"The big move of the morning was in the normally somnolent
EURGBP pair, which slumped as reports hit that the EU parliament
was preparing it's own plan for the UK-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 4.2% 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
3.5% 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) slid 5.2%. 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 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, 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 05:45 ET (10:45 GMT)
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