EUROPE MARKETS: European Stocks Finish With Gains As Fed Inspires Risk Taking
September 22 2016 - 12:24PM
Dow Jones News
By Sara Sjolin and Victor Reklaitis, MarketWatch
EDF drops after trimming outlook, then closes slightly
higher
European stock markets scored solid advances on Thursday after
the U.S. Federal Reserve refrained from raising interest rates and
said it needs more evidence of a stronger economy before it
tightens policy.
The Stoxx Europe 600 index rallied 1.6% to end at 347.86, giving
the regional benchmark a second straight day of gains.
Mining and oil firms were among the biggest advancers, scoring a
boost from a weaker dollar in the aftermath of the Fed decision,
released after the European close on Wednesday.
The U.S. central bank kept its main benchmark rate at 0.25% to
0.50%, but hinted a rate hike is on the cards in December
(http://www.marketwatch.com/story/fed-dotplot-points-to-one-rate-hike-in-2016-just-two-in-2017-2016-09-21).
Traders in Europe and the U.K. closely watch where U.S. interest
rates are headed, as they are a major driver for the global economy
and currency markets.
"Although the monetary policy decision was viewed as dovish,
which sent equities higher across the board and the dollar lower,
the Federal Reserve has never been seen as divided so far this
year," said Hussein Sayed, chief market strategist at FXTM, in a
note.
"Three out of the ten voting members dissented against the
decision, calling for an immediate rate hike, this made the call
for a December rate increase much stronger," he added.
Metals and oil prices
(http://www.marketwatch.com/story/oil-keeps-moving-higher-on-another-drop-in-us-crude-stocks-2016-09-22)
climbed as the ICE U.S. Dollar Index dropped 0.5%, helping to boost
Europe's commodities companies.
Shares of BHP Billiton PLC (BLT.LN) (BHP.AU) (BHP.AU) gained
4.1%, Boliden AB (BOL.SK) added 4.6%, and Randgold Resources Ltd.
(RRS.LN) rose 4.4%.
Among major oil companies, Eni SpA (ENI.MI) put on 1.1%, and
Total SA (TOT) (TOT) climbed 3.7%, while BP PLC (BP.LN)(BP.LN)
added 2.4%.
Other movers: Shares of A.P. Moeller-Maersk AS (MAERSK-B.KO)
advanced 3.4% after the Danish company said it is splitting into
two companies
(http://www.marketwatch.com/story/maersk-to-split-into-2-units-energy-and-transport-2016-09-22),
spinning off its oil unit. The remainder will focus on
transportation and logistics.
Rocket Internet SE (RKET.XE) finished 6.8% higher after the
German tech company said the biggest companies in its portfolio
narrowed their combined loss in the first half of the year
(http://www.marketwatch.com/story/rocket-internets-portfolio-firms-narrow-losses-2016-09-22).
Shares in Ericsson AB (ERIC) rose 2.7% after media reports
(http://www.reuters.com/article/us-sweden-ericsson-idUSKCN11S0G9)
that the maker of mobile telecom equipment said it plans to shutter
its last manufacturing site in Sweden and cut about 3,000 jobs.
Nokia Corp. (NOK) (NOK) climbed 3.4% after it launched a public
buyout offer
(http://www.marketwatch.com/story/nokia-makes-buyout-offer-for-alcatel-lucent-shares-2016-09-22)
for all securities of Alcatel-Lucent (ALU.FR) that the Finnish
telecom-equipment maker doesn't yet own.
On a less upbeat note, Electricite de France SA (EDF.FR) dropped
in the early going after the utility company late Wednesday trimmed
its earnings outlook
(http://www.marketwatch.com/story/edf-trims-outlook-on-lower-nuclear-power-output-2016-09-22).
But the stock recovered and finished 0.4% higher.
Indexes: Germany's DAX 30 index jumped 2.3% to close at
10,674.18, while France's CAC 40 index added 2.3% to finish at
4,509.82.
The U.K.'s FTSE 100 index gained 1.1% to end at 6,911.40
(http://www.marketwatch.com/story/ftse-100-rallies-as-fed-keeps-interest-rates-on-hold-2016-09-22).
Economic news: The European Central Bank said in its economic
bulletin it expects eurozone economic growth to continue to grow at
a moderate pace
(http://www.ecb.europa.eu/pub/economic-bulletin/html/eb201606.en.html),
but with downside risks because of the economic and political
uncertainty globally. It warned that the U.K.'s Brexit vote is
likely to weigh on the country's economy.
In the same vein, the Bank of England's Financial Policy
Committee also said the U.K. is facing a "challenging period of
uncertainty and adjustment"
(http://www.wsj.com/articles/boe-warns-of-post-brexit-challenges-facing-u-k-economy-1474534896?mod=wsj_nview_latest)
as a result of the EU referendum.
In addition, ECB President Mario Draghi warned the region's
banking sector
(http://www.marketwatch.com/story/ecbs-draghi-warns-crowded-banking-sector-is-squashing-profits-2016-09-22)
is getting too crowded, with overcapacity eroding profits and
ultimately forcing some lenders to shake up their business.
French manufacturing confidence rose unexpectedly in September
(http://www.marketwatch.com/story/french-manufacturing-confidence-rises-unexpectedly-2016-09-22),
rising to 103 from 101 in August.
(END) Dow Jones Newswires
September 22, 2016 12:09 ET (16:09 GMT)
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