Stock Market News (US Open) – European equities rebound to trade higher; Wall Street opens lower

Stock Market News (US Open) – European equities rebound to trade higher; Wall Street opens lower

Andreas Georgiou, XM Investment Research Desk

European stocks reversed losses from earlier in the day as almost every major benchmark in the continent traded in the green a little before European markets close for the weekend. The pan-European Stoxx 600, which was 0.2% down at its lowest, last traded up on the margin. At its highest, it reached a two-month peak. On a weekly basis, it is up by a decent 0.6%.

The FTSE 100 and CAC 40 were up by 0.2% and 0.3% respectively. The DAX was only marginally lower. The Italian FTSE MIB, which year-to-date is leading the gains among major benchmarks in the continent, being up by 17.0%, was last up on the margin.

UK Prime Minister Theresa May is currently giving a speech in Florence pertaining to her government’s Brexit strategy. The FTSE 100 was gaining as PM May was talking as the British currency was declining relative to majors including the dollar and the euro. Also, German elections are in the background, with Angela Merkel expected to emerge as victor, serving as Chancellor for a fourth term. Most interest on Sunday is on whether she will manage to win an outright majority.

Engineering business Smiths Group remained the Stoxx 600’s and the FTSE’s worst performing stock, last trading 5.95% down on the day. The UK conglomerate reported a decline in underlying (i.e. for certain units) full-year revenue.

L’Oréal remained in positive territory to lead gains in the Stoxx 600 and the CAC 40, last trading up by 3.6%. The death of businesswoman and billionaire Liliane Bettencourt, whose family is L’Oreal’s largest shareholder, is spurring speculation that Nestlé (last up by 0.4%) will divest its position in the company. The Kit Kat maker owns 23% of the cosmetics giant. In one of the scenarios, L’Oréal is seen as buying back the shares from Nestlé, which in turn is spurring speculation that L’Oréal will sell its position in pharmaceuticals company Sanofi (last up by 0.8%) in order to accumulate the amount needed.

In other news, Anglo-Swedish pharmaceutical AstraZeneca was performing strongly, being up 3.1% to render itself the FTSE’s best performing stock. Analysts at Bernstein raised the company’s rating to “outperform”, among others expecting higher growth that could make the firm a take-out candidate.

Despite remaining in negative territory, Anglo American (last down 0.8%), BHP Billiton (last down 0.6%) and Antofagasta (last down 0.4%) – all three are FTSE component stocks – recovered on a significant part of earlier losses. Mining companies have been suffering on retreating base metals prices.

Within minutes of the opening bell on Wall Street, the Dow Jones Industrial Average was trading marginally lower, the S&P 500 was 0.05% down and the Nasdaq 100 down by 0.2%. iPhone maker Apple extended its decline yesterday, declining by a hefty 1.7% and falling to its lowest since early August. There are concerns regarding demand for its latest iPhone 8 model. The tech giant is a constituent stock in all three aforementioned benchmarks.

In US M&A activity, T-Mobile and Sprint will be in focus ahead of a possible merger between the two telecommunications companies.

The exchange of tough comments between the US and North Korea could also push some traders to lock in some profits before they close their books for the weekend.

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