EUROPE MARKETS: European Markets Keep Climbing After Dovish Fed
June 20 2019 - 9:51AM
Dow Jones News
By Dave Morris
European markets continued to rally after the U.S. Federal
Reserve indicated it was considering future rate cuts at its policy
meeting Wednesday.
How did markets perform?
The Stoxx 600 was 0.7% higher at 387.6, following Wednesday's
rally of 1.7%.
The U.K.'s FTSE 100 was up 0.6% to 7,452.5. On Wednesday the
index closed 1.2% higher.
The pound was up 0.3% to $1.2682, more than erasing Wednesday's
gap down of 0.1%.
In Germany, the DAX rose 0.8% to 12,407, adding to Wednesday's
increase of 2%.
France's CAC 40 climbed 0.7% to 5,556. It jumped 2.2%
Wednesday.
Italy's FTSE MIB leapt ahead 0.8% to 21,391, after surging 2.5%
Wednesday.
Oil prices rose as tensions in the Gulf continued to escalate.
The West Texas Intermediate (WTI) crude oil benchmark was up 3% to
$55.37/bbl. while the Brent benchmark was 2.3% higher at
$63.25/bbl.
What's moving the markets?
The U.S. Federal Reserve did not cut rates
(http://www.marketwatch.com/story/fed-holds-interest-rates-steady-will-now-closely-monitor-data-in-shift-away-from-patient-stance-2019-06-19),
but it did signal that it was considering doing so at its policy
rate announcement Wednesday, citing growing "uncertainties".
Various asset classes responded to the news, with U.S. equities
rising, Treasury bond yields falling and gold reaching a five-year
high
(http://www.marketwatch.com/story/gold-soars-to-five-year-high-after-fed-hints-at-interest-rate-cuts-2019-06-20).
Lee Ferridge, head of multi-asset strategy in the Americas at
State Street Global Markets, said the current strong employment and
inflation figures support the Fed's decision not to cut rates:
"Weak global economic data, falling inflation expectations and
continued concerns over the trade war explain the Fed's dovish
stance. However, it has to be recognized that from a domestic
standpoint it is hard to justify the three cuts that the market is
pricing over the course of 2019."
Iran claimed responsibility for shooting down a U.S. drone
(http://www.marketwatch.com/story/iran-says-it-shot-down-us-drone-amid-rising-tensions-2019-06-19),
which it said had entered Iranian airspace near the Strait of
Hormuz. A U.S. spokesperson told the Associated Press there was "no
drone over Iranian territory". The disagreement is the latest in
tensions between the two countries exacerbated by an incident where
the U.S. accused Iran of having attacked two oil tankers near the
Gulf of Oman. Iran denies involvement.
In economic data, U.K. retail sales in May disappointed. They
rose 2.3% year over year, revised, versus 2.5% expected. The Bank
of England left key interest rates unchanged at a meeting earlier
Thursday, but said Brexit and global trade uncertainty was hanging
over the U.K. economy.
Which stocks are active?
Novo Nordisk A/S (NOVO-B.KO) was downgraded to hold by Deutsche
Bank analysts, after the pharmaceutical major's shares strengthened
in June. Analyst Richard Parkes said the growth potential of the
company was now fully priced in. On June 14, Novo Nordisk shares
gained on news that U.S. rival Eli Lilly had presented
disappointing data on a drug to compete with Novo's diabetes
treatment. Novo Nordisk shares fell 1.7% Thursday.
Delivery Hero SE (DHER.FF) shares jumped 8.7% as the company
raised its revenue guidance for the full year, indicating that the
second quarter has already outperformed the online food ordering
company's expectations. Delivery Hero increased its full year
revenue guidance for 2019 by EUR200 million.
Shares in Dixons Carphone PLC (DC.LN) plummeted 12% after the
electronics retailer reported disappointing fiscal 2019 earnings
(http://www.marketwatch.com/story/dixons-carphone-swings-to-loss-on-higher-costs-2019-06-20).
The company's pretax profit was down 22% year over year, to GBP298
million.
(END) Dow Jones Newswires
June 20, 2019 09:36 ET (13:36 GMT)
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