EUROPE MARKETS: European Stocks Flip Up As Draghi Talks About Keeping Up Bond Buying
14 Marzo 2018 - 10:47AM
Dow Jones News
By Carla Mozee, MarketWatch
Adidas shares in rally mode after results
European stocks latched onto small gains Wednesday, buoyed after
European Central Bank President Mario Draghi said its bond-buying
program will likely continue if underlying inflation in the region
remains subdued.
Meanwhile, investors were sifting through more corporate
updates, including one from Adidas AG that sent shares of the
German sports gear maker flying higher by double digits.
How markets are moving
The Stoxx Europe 600 index rose 0.1% to 375.83, led by gains for
consumer goods and telecom stocks. But tech stocks lost the most.
On Tuesday, the index dropped 1%
(http://www.marketwatch.com/story/european-stocks-edge-higher-in-countdown-to-us-inflation-data-2018-03-13),
largely as the euro and the pound surged against the U.S.
dollar.
France's CAC 40 index turned up by 0.1% to 5,249.16. Germany's
DAX 30 rose 0.3% to 12,254.03.
The U.K.'s FTSE 100 index rose 0.3% to 7,1621.44, but Spain's
IBEX 35 fell 0.3% to 9,658.40.
The euro bought $1.2373, down from $1.2392 late Tuesday in New
York.
What's driving markets
Regional indexes began to rotate higher as the euro pulled back
during a speech by ECB President Mario Draghi at conference in
Frankfurt. He did say the eurozone economy has been strengthening
more than it had anticipated.
However, "there is a very clear condition for us to bring net
asset purchases to an end: we need to see a sustained adjustment in
the path of inflation towards our aim, which is a headline
inflation rate of below, but close to 2% over the medium term," he
said, adding that "the performance of underlying inflation remains
subdued compared with previous recoveries."
The euro declined as soft inflationary pressures would likely
keep the European Central Bank from raising interest rates in the
foreseeable future. "The key issues we need to examine are wage
dynamics, their pass-through to prices, and the possible risks to
the inflation outlook," said Draghi.
A weaker euro can help bolster shares of European exporters as
it makes their goods and services less expensive to purchase for
overseas buyers. The euro on Tuesday leapt above $1.24 for the
first time since March 8 after an expected reading of U.S. consumer
prices February
(http://www.marketwatch.com/story/consumer-inflation-less-threatening-in-february-cpi-shows-2018-03-13)
tamped down concerns that the Federal Reserve will raise interest
rates four times in 2018 instead of three as previously
expected.
The eurozone's final reading of consumer price inflation for
February is scheduled for release on Friday.
What strategists are saying
"After the moves on the greenback yesterday, this morning has
seen Mario Draghi undo some of the work on EURUSD with the pair
falling lower after the ECB president was a little clearer on some
points. Inflation was the main point he made saying that stronger
CPI adjustment would be a reason to end the QE, but of course
reiterated that patience is the key when it comes to the monetary
policy," said James Hughes, chief market analyst at AxiTrader, in
an note.
Stocks in focus
Adidas AG shares (ADS.XE)jumped 9% for the Stoxx Europe 600's
biggest gain after the sporting goods company upgraded its
long-term profitability target
(http://www.marketwatch.com/story/adidas-loss-widens-on-tax-hit-as-sales-rise-2018-03-14)
even as its posted a fourth-quarter net loss due to a one-off
negative tax effect. Adidas will also propose lifting its dividend
of EUR2.60 a share and that it will initiate share buyback program
of up to EUR3 billion.
Shares in Inditex SA (ITX.MC)fell 2.6% as the parent company for
apparel retailer Zara said sales in stores that have been open for
a year or more rose 5%, a marked slowdown
(http://www.marketwatch.com/story/zara-parent-inditex-fy-profit-up-sales-sluggish-2018-03-14)
from the 10% growth reported the previous period.
Prudential PLC (PRU.LN)climbed 5% after the financial services
company saying it will demerge M&G Prudential
(http://www.marketwatch.com/story/prudential-to-demerge-mg-arm-2018-03-14).
Following that move, M&G Prudential will be an independent
provider of savings and investment services.
Shares in Bpost (BPOST.BT)tumbled 19% for the Stoxx 600's
biggest drop after the Belgian postal-services company forecast
2018 core earnings of 560 million euros ($693 million) to 600
million euros. That was below a Thomson Reuters consensus estimate
of 637 million euros.
(END) Dow Jones Newswires
March 14, 2018 05:32 ET (09:32 GMT)
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