European Commentary
FONT-SIZE Plus   Neg
Share SHARE

European Markets Closed Solidly Higher After Strong U.S. Performance

The European markets finished in the green again Thursday, following yesterday's rebound. The markets were under pressure following the larger than expected increase in U.S. weekly jobless claims. The positive open of the U.S. stock markets and their strong rally provided support to the European markets in the afternoon.

The U.S. economic recovery proceeded at a modest pace in recent months, as manufacturers expressed optimism despite concerns about higher energy prices, the Federal Reserve's Beige Book said Wednesday. Consumer spending was "encouraging" across a number of the Fed's twelve districts.

The European Central Bank said that inflation in Eurozone is subject to upside risks and it is ready with all the tools necessary to address them "in a firm and timely manner." Inflation in the 17-nation economy is expected to stay above 2 percent in 2012, with upside risks prevailing, the ECB said in its monthly bulletin, echoing the comments made by President Mario Draghi at last week's post-policy meeting press conference.

Italy's borrowing costs for 3-year bonds increased at a debt auction that slightly missed the maximum target. The treasury on Thursday sold EUR 2.884 billion of 2.5 percent BTP bonds maturing on March 2015 at a higher yield amid waning demand. The maximum planned amount was EUR 3 billion. The yield rose to 3.89 percent, the highest since mid-January, from 2.76 percent.

Citigroup lowered global financial equities to "Neutral" and cut global telecom equities to "Underweight." The brokerage raised global industrial equities to "Overweight."

The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.53 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, climbed by 0.78 percent.

The CAC 40 of France rose by 0.99 percent and the DAX of Germany gained 1.03 percent. The FTSE 100 of the U.K. closed up by 1.34 percent and the SMI of Switzerland increased by 1.08 percent.

In Frankfurt, Infineon Technologies climbed by 5.76 percent, after Deutsche Bank upgraded its rating on the stock to "Buy" from "Hold."

Metro fell by 1.81 percent, after Berenberg downgraded the stock to "Sell" from "Hold."

Vossloh increased by 4.05 percent, after HSBC raised the stock to "Overweight" from "Neutral."

Sky Deutschland surged by 15.10 percent after UBS raised the stock to its 'Most Preferred List.'

Fresenius finished up by 1.94 percent and Fresenius Medical Care gained 1.44 percent. Barclays initiated Fresenius with an "Overweight" rating and Fresenius Medical Care with an "Equalweight" rating.

Gerresheimer increased its fiscal 2012 revenue forecast, despite lower first-quarter profit. The stock finished higher by 10.09 percent.

In Paris, Carrefour closed up by 0.59 percent. The grocery retailer reported a marginal rise in sales for the first quarter, helped by overall growth in emerging markets and a positive calendar effect in most geographies. Berenberg cut the stock to "Sell" from "Hold."

Danone increased by 0.79 percent, after Societe Generale raised the stock to "Buy" from "Hold."

In London, Hays climbed by 8.86 percent. The staffing firm sees operating profit for the year to be towards the top of the current range of market estimates.

Shares of GKN rose by 6.16 percent. Credit Suisse upgraded its rating on the stock to "Outperform" from "Neutral."

Rolls-Royce Holdings increased by 3.05 percent. The company announced that it won a U.S. Navy contract to supply power and propulsion systems.

Roche increased by 1.56 percent in Zurich. The drug giant reported a 1 percent drop in first-quarter sales, as organic performance was offset by a stronger currency. Signaling its willingness to raise its already sweetened offer for U.S.-based gene mapping company Illumina, Roche said its revised $6.7 billion bid is a more than reasonable starting point for negotiations.

Industrial production in the euro area unexpectedly increased in February, helped by a marked increase in energy production, data released by statistical office Eurostat showed Thursday. Industrial production moved up 0.5 percent on a monthly basis in February, after remaining flat in the previous month. Economists were looking for a 0.2 percent decrease.

First-time claims for U.S. unemployment benefits showed a notable increase in the week ended April 7th, according to a report released by the Labor Department on Thursday, with the data raising some concerns about the outlook for the jobs market.

The report showed that initial jobless claims rose to 380,000 from the previous week's revised figure of 367,000. Economists had expected jobless claims to edge up to 359,000 from the 357,000 originally reported for the previous week.

With energy prices falling in the month of March, the Labor Department released a report on Thursday showing that producer prices for the month unexpectedly came in unchanged. The Labor Department said its producer price index was flat in March following a 0.4 percent increase in February. Economists had been expecting the index to increase by 0.3 percent.

The U.S. trade deficit shrank dramatically in February, according to figures released Thursday by the Commerce Department, with the decrease in the size of the deficit reflecting a sharp drop in the value of imports. The report showed that the trade deficit narrowed to $46.0 billion in February from $52.5 billion in January. Most economists had expected the deficit to shrink somewhat from January, but the consensus had the deficit much wider at around $51.7 billion.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

Market Analysis

comments powered by Disqus