Mon. Sep 28th, 2020

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Major European Markets Close Higher

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European markets closed on a slightly positive note on Friday despite ongoing concerns about Brexit and continued surge in coronavirus cases in several parts of Europe.

The latest batch of economic data and somewhat volatile movements on Wall Street also impacted stock prices in the European markets today.

On the Brexit front, the British government has reportedly opted to insist on a controversial bill that could undermine a Brexit divorce deal its signed last year, despite an ultimatum and the threat of legal action from the European Union.

The EU has urged the UK to drop plans to override the Withdrawal Agreement “by the end of the month” or risk jeopardising trade talks.

Markets also reacted to an announcement from Britain that it has secured its first major trade deal post-Brexit, agreeing to a tentative free trade deal with Japan. The deal will have to get the approval from policymakers of the two nations, and once done, will come into force at the end of the year.

ECB chief economist Philip Lane’s warning that the deflationary impact of the Covid-inspired recession still persists weighed on sentiment. Lane wrote in a blog that “there has been only partial progress in combating the negative impact of the pandemic on projected inflation dynamics.”

The pan European Stoxx 600 moved up 0.27%. The U.K.’s FTSE 100 gained 0.48%, France’s CAC 40 advanced 0.2% and Germany’s DAX edged down 0.05%, while Switzerland’s SMI gained 0.5%.

Among other markets in Europe, Ireland, Netherlands, Norway, Poland, Russia and Turkey closed higher.

Austria, Belgium, Czech Republic, Finland, Greece, Portugal and Spain drifted lower, while Denmark, Iceland and Sweden ended flat.

In the U.K. market, Royal Mail climbed nearly 7.5%. Aviva moved up nearly 6%, while Anglo American, Glencore and Burberry Group gained 4 to 5%.

Shares of Rio Tinto moved up by about 5%. The company’s CEO stepped down after backlash over the destruction of an ancient Aboriginal site in Western Australia.

Antofagasta, Melrose, CRH, ITV, Flutter Entertainment, Mondi and 3i Group were among the other prominent gainers.

On the other hand, Meggitt, Morrison Supermarkets, Taylor Wimpey, TUI, IAG and JD Sports Fashion lost 2.5 to 3.2%. Barclays, Lloyds Banking Group, Centrica, EasyJet and Standard Chartered ended lower by 1.5 to 2%.

In the French market, LVMH moved up more than 3%. The company has alleged Tiffany’s mismanagement through the coronavirus pandemic invalidates a $16 billion takeover agreement it had entered into with the U.S. firm. Tiffany had already filed a lawsuit against LVMH over its withdrawal from the deal.

Kering gained about 2%. Hermes International advanced 1.4%, while Sanofi, Peugeot, STMicroElectronics and Michelin ended higher by 0.6 to 1%.

Among the losers in the CAC 40 index, Technip declined 4.7% and Accor closed 4.25% down. Societe Generale, BNP Paribas, Credit Agricole, Sodexo and Renault lost 1.7 to 3%.

In Germany, Merck, Covestro, BMW, Bayer, Adidas and Vonovia closed higher. Thyssenkrupp declined 3.75%. Deutsche Bank, Lufthansa, Wirecard and Continental lost 1.6 to 2.3%.

In economic news, data published by the Office for National Statistics showed the UK economy expanded for the third straight month in July as lockdown measures continued to ease. GDP expanded 6.6% in July from June, when it gained 8.7%, the data said. Economists expected GDP to climb 6.7%. In three months to July, GDP fell 7.6% from the previous three months.

Likewise, industrial output rose 5.2%, slower than the 9.3% increase seen in the previous month. Manufacturing output advanced 6.3%.

Another report from the ONS showed that the visible trade deficit widened to GBP 8.63 billion in July from GBP 6.55 billion in June. Exports fell 0.9 percent on month, while imports grew 5.8 percent in July. The total trade surplus fell to GBP 1.07 billion from GBP 3.9 billion a month ago.

Germany’s consumer prices were unchanged in August after a 0.1% fall in July, data from Destatis showed.. Compared to the previous month, the index decreased 0.1%.

The harmonized index of consumer prices, or HICP, dropped 0.1% year-on-year after remaining unchanged in July. The index fell for the first time since May 2016.

Britons’ inflation expectations for the coming year slowed marginally in August, the quarterly Bank of England/Kantar Inflation Attitudes Survey showed on Friday.

The rate of inflation for the coming year is seen at 2.8% compared to 2.9% estimated in May. Meanwhile, expected inflation for the twelve months after that rose to 2.2% from 1.9%. Median expectations for inflation in the longer-term, say in five years’ time increased to 2.8% from 2.6%.

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2020-09-11 13:44:53

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