EUROPE MARKETS: European Stocks Seesaw As Italian Politics, Earnings Remain In Focus
May 17 2018 - 6:26AM
Dow Jones News
By Sara Sjolin, MarketWatch
Ocado surges after deal to enter U.S. market
European stocks struggled for direction on Thursday, repeating
the trading pattern seen over the last few days as traders
continued to weigh up political risks against corporate news.
Ocado shares soared after a new partnership agreement to enter
the U.S. market.
What are markets doing?
The Stoxx Europe 600 index rose 0.1% to 393.66, on track to
close at its highest level since Jan. 31, according to FactSet
data. The pan-European index has been grinding higher in recent
days, but in volatile trade where it has swung between small gains
and losses.
The U.K.'s FTSE 100 index was up slightly at 7,735.52
(http://www.marketwatch.com/story/uk-stocks-at-4-month-high-as-government-opens-up-for-customs-union-after-brexit-2018-05-17),
but the gain was limited by a rally in the pound . Sterling rose to
$1.3530
(http://www.marketwatch.com/story/pound-surges-on-customs-union-report-dollar-hovers-at-2018-highs-2018-05-17)
from $1.3490 late Wednesday in New York after a report in the Daily
Telegraph that the U.K. government plans to stay in the EU's
customs union beyond 2021.
Germany's DAX 30 index was up 0.1% at 13,006.24, while France's
CAC 40 index rose 0.3% to 5,586.02.
Italy's FTSE MIB Index added 0.6% to 23,880.70, as coalition
talks between the country's two biggest populist parties continued.
Italian stocks and bonds tumbled on Wednesday
(http://www.marketwatch.com/story/italian-markets-spooked-as-radical-agenda-from-5-star-league-fuels-fears-of-new-crisis-2018-05-16)after
a leaked draft of their political agenda sparked fears Italy could
end up leaving the eurozone.
Read:Italian bonds show euro 'exit' fears still rumble below the
surface
(http://www.marketwatch.com/story/italian-bonds-show-euro-exit-fears-still-rumble-below-the-surface-2018-05-16)
10-year Italian yields moved slightly lower to 2.107%, according
to Tradeweb.
The euro rose to $1.1821 from $1.1807 late Wednesday in New
York.
What is driving the market?
The muted trading action came as investors continued to monitor
political developments in Italy and the U.K. as well as a flurry of
corporate news.
In Italy, the 5 Star Movement and the League parties reportedly
prepared a new draft of their coalition program, which is likely to
be submitted to Italian President Sergio Mattarella later on
Thursday. The new program reportedly included no references to the
possibility about Italy leaving the euro, but did point to the need
for a revision of EU treaties.
Meanwhile, in the U.K., the pound rose after a report that the
U.K. government plans to tell Brussels it wants to stay in the
European Union's customs union beyond 2021 in an effort to avoid a
hard border with Ireland. Such a scenario would create a so-called
soft Brexit, which hard-line Brexiteers have argued against.
The report, in the Daily Telegraph
(https://www.telegraph.co.uk/politics/2018/05/16/britain-will-tell-eu-prepared-stay-tied-customs-union-beyond/),
said Prime Minister Theresa May's Brexit subcommittee has agreed on
Britain staying in the union on a temporary basis, if the
technology needed to keep the borders working after Brexit isn't up
and running.
What are strategists saying?
"The euro is coming under pressure on the back of Italian
political uncertainty and the implications an anti-establishment
government by the 5 Star Movement and (Northern) League parties
will have for the euro area. The story will be closely watched as
it is expected to be the major driver in euro pairs, at least in
the short term," said Andreas Georgiou, investment analyst at XM,
in a note.
Which stocks are in focus?
Shares of Ocado Group PLC (OCDO.LN) soared 43%. The company,
which runs online delivery services and makes related software,
said it has signed a partnership agreement with U.S. supermarket
chain Kroger Co
(http://www.marketwatch.com/story/ocado-entering-us-market-through-technology-deal-with-kroger-2018-05-17).(KR)
under which Kroger will use Ocado's technology in the U.S. for
grocery and other food-distribution activities.
Shares of A.P. Moeller-Maersk A/S (MAERSK-B.KO) slumped 9.7%
after the Danish shipping major reported earnings below
expectations.
U.K gambling companies were in focus again after the U.K.
government's decision to cut the maximum bets
(http://www.marketwatch.com/story/uk-betting-companies-warn-of-financial-hits-2018-05-17)
that can be placed on fixed-odds betting terminals to 2 pounds
($2.70). People can currently bet up to GBP100 every 20 seconds on
such machines.
William Hill PLC (WMH.LN) , down 0.7%, said the changes could
cause a 35% to 45% fall in its total net gaming revenue. Paddy
Power Betfair PLC , up 2.2%, said the new stake limit could cause a
33% to 43% fall in its total machine gaming revenue.
William Hill and Paddy Power are up 11% and 19%, respectively,
on the week after a favorable U.S. Supreme Court ruling on Monday
that could open sports betting around the nation.
Altice NV (ATC.AE) jumped 9.3% after the telecoms giant said
subscribers rose in the fist quarter at the strongest "trends
Altice has ever reported."
(END) Dow Jones Newswires
May 17, 2018 06:11 ET (10:11 GMT)
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