EUROPE MARKETS: European Stocks Chip Out Small Gain On Concerns Over German Election
September 25 2017 - 5:02AM
Dow Jones News
By Carla Mozee, MarketWatch
DAX takes a small step higher, euro falls as result signals
potential turbulence ahead
European stocks ticked higher Monday as investors digested the
outcome of Germany's general election, which delivered a win for
Chancellor Angela Merkel's conservative alliance but signaled
potential turbulence ahead.
The Stoxx Europe 600 index added 0.1% to 383.55, with only the
oil and gas sector holding gains. On Friday, the index ended up by
0.1%
(http://www.marketwatch.com/story/european-stocks-shaken-by-north-korea-but-strong-pmis-keep-losses-in-check-2017-09-22)
and marked a weekly advance of 0.7%.
German stocks reached for a small gain. In Frankfurt, the DAX 30
was up 0.1% at 12,600, but had opened in the red.
The victory of Merkel's center-right bloc
(http://www.marketwatch.com/story/germanys-anti-immigrant-party-set-to-be-first-in-more-than-50-years-to-enter-parliament-2017-09-24)
over the center-left Social Democrats all but assures a fourth term
for the Chancellor. But Merkel's Christian Democrats and its
Bavarian sister party logged their worst result since 1949, while
the anti-immigrant Alternative for Germany (AfD) party won around
13% of the vote, becoming the first far-right party to win seats in
Parliament in more than 50 years.
"As predicted, Angela Merkel won a fourth term in office, but
not without handing over a chunk of her vote to the Far Right AFD,"
said Lee Wild, head of equity strategy at Interactive Investor, in
a note.
"The [Social Democratic Party] did even worse, and the
Chancellor will be forced into bed with the Greens and the Free
Democrats (FDP) in a Jamaica coalition. Any extended period of
uncertainty poses a problem, certainly if the FDP's dislike of
Macron threatens Germany's relationship with France. Markets won't
like that," he said.
Analysts have said it could take months for a new governing
coalition in Germany to be formed, with issues such as EU
integration and immigration the points of contention. One concern
is that the outcome will now make it more difficult to push forward
on financial integration of the eurozone.
The euro was buying $1.1910, down from $1.1948 late Friday in
New York. The shared currency dropped against the pound, buying
0.8797 pence, down from 0.8853 pence on Friday.
The yield on Germany's 10-year bund fell 2 basis point to
0.431%, according to Tradeweb. Yields fall when prices rise.
"It's possible that Angela Merkel becomes distracted from
international politics during the inevitable horse trading
following a disappointing election for her. Any sense that this
weakens the EU's position could play into the hands of U.K. Brexit
negotiators, as a fourth round of talks with European officials
begins in Brussels today," said Wild.
Stock movers: Unilever PLC (ULVR.LN) turned higher by 0.3%. The
consumer products heavyweight reached a deal to buy skincare
business Carver Korea for 2.27 billion euros
(http://www.marketwatch.com/story/unilever-agrees-to-buy-carver-korea-for-227-bln-2017-09-25)
($2.7 billion), a move Unilever said will strengthen its position
in northern Asia.
Engineering and power grid company ABB Ltd. (ABBN.EB) was up
0.4% after General Electric Co. (GE) agreed to sell its
industrial-solutions business to ABB. ABB will pay $2.6 billion for
the GE unit
(http://www.marketwatch.com/story/ge-to-sell-industrial-unit-to-abb-for-26-bln-2017-09-25),
which makes electrical equipment for utilities.
Individual indexes: France's CAC 40 was flat at 5,281.65, and
the U.K.'s FTSE 100 fell 0.2% to 7,295.01.
Economic data: German business confidence fell unexpectedly in
September, new figures released by Ifo on Monday show. The German
think tank's business climate index dropped to 115.2 points
(http://www.marketwatch.com/story/german-business-sentiment-falls-in-september-ifo-2017-09-25)
from 115.9 points in August, compared with expectations for
115.9.
(END) Dow Jones Newswires
September 25, 2017 04:47 ET (08:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
FTSE 100
Index Chart
From Mar 2024 to Apr 2024
FTSE 100
Index Chart
From Apr 2023 to Apr 2024