Europe Trades in Tight Ranges; Vodafone Outperforms

Europe Trades in Tight Ranges; Vodafone Outperforms

By Ritu,

Capital Sands

European stock markets traded in tight ranges Tuesday, as investors weighed up the benefits of reopening economies with the possibility of a second wave of Covid-19 victims.

At 3:55 AM ET (0755 GMT), the DAX in Germany traded 0.1% higher, France’s CAC 40 fell 0.08%, while the U.K.’s FTSE index was up 0.3%.

France’s economic downturn is easing as the country emerges from a lockdown imposed in mid March, although activity remains mired at levels far below normal, the central bank said on Tuesday.

The euro zone’s second-biggest economy was operating 27% below normal levels in April, a little better than the 32% gap seen in the second half of March, the Bank of France said, summarizing responses from its monthly business climate survey.

This comes as countries around the world gradually ease restrictions in an effort to restart their economies.

However, the Robert Koch Institute in Germany, the country widely seen as having handled the crisis the best in Europe, reported that the “reproduction rate” – the number of people each person infected with the coronavirus goes on to infect – had risen to 1.1 in the wake of the relaxation of national guidelines.

Any rate above 1 means the virus is spreading exponentially, and this will be seen as a worrying outcome.

This follows the discovery of five new cases in Wuhan in China, where the pandemic originated, as well as a new outbreak in South Korea, whose aggressive testing and contact tracing had kept infection rates low during the virus’ first wave.

In corporate news, Vodafone stock climbed 5.8% after the world’s second-largest mobile operator met expectations with a 2.6% rise in full-year core earnings. However, it did not give a current year outlook due to the uncertainty caused by the coronavirus.

On the flip side, TV and stereo maker Bang & Olufsen dropped nearly 10% after saying it will ask shareholders to approve a 400 million crown ($57.99 million) rights issue to help it through the coronavirus crisis.

AIB Group  fell 2.7% after saying its performance for the first quarter of the year worsened, and warning  it would have to take large credit provisions.

German insurance giant Allianz  slid 2.8% after reporting a big virus-related hit to its property and casualty arm and also suffering outflows of nearly $50 billion from its asset management arm PIMCO. Industrial giant Thyssenkrupp  slid 10% after detailing another big loss in its fiscal second quarter and the promise of an even bigger one in the current quarter.

Oil futures edged higher Tuesday, continuing to be helped by Saudi Arabia’s move Monday to voluntarily deepen its production cuts.

At 3:55 AM ET, U.S. crude June futures traded 2.2% higher at $24.66 a barrel. The international benchmark Brent contract rose 0.9% to $29.89.

Elsewhere, gold futures rose 0.5% to $1,705.80/oz, while EUR/USD traded at 1.0816, up 0.1%.

Europe Pushes Higher as Trade War Threat Recedes

Europe Pushes Higher as Trade War Threat Recedes

By Ritu,

Capital Sands

European stock markets pushed higher Friday, helped by a lessening of tensions between China and the U.S. ahead of key employment data.

At 4 AM ET (0800 GMT), the DAX in Germany traded 0.8% higher, and France’s CAC 40 rose 0.6%. The U.K.’s FTSE index was closed due to a holiday.

China’s Vice Premier Liu He talked with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin by phone on Friday Beijing time, according to China’s Xinhua News Agency. The two sides pledged to cooperate on the economy and public health, the report said.

The two sides have traded barbed comments about the origin and spread of the Covid-19 pandemic over recent days, with the Trump administration at one point threatening trade sanctions as a punishment for China’s perceived part in the outbreak.

In corporate news, ING  stock climbed over 5% despite the Dutch bank posting a drop in first quarter profit of 35% on the back of higher provisions taken for the potential fallout from the coronavirus outbreak. The numbers were still better than expected.

However, activity is likely to be limited Friday ahead of the key U.S. employment report for April, which will capture an entire month of lockdown measures that brought large parts of the economy to a standstill.

Economists expect that nonfarm payrolls plunged by 22 million last month, when the data are released at 8:30 AM ET (12:30 GMT).

“That bad report tomorrow is actually going to understate how bad the damage has been,” Minneapolis Federal Reserve Bank President Neel Kashkari explained, adding that the reported unemployment rate could be as high as 17%, but he says the true number may be as high as 24%. “It’s devastating.”

Oil futures pushed higher Friday, with investors cautiously optimistic as lockdown measures continue to be loosened in the U.S. leading to slow but steady increases in demand.

At 4 AM ET, U.S. crude June futures traded 4.8% higher at $24.69 a barrel. The international benchmark Brent contract rose 2.8% to $30.28.

Elsewhere, gold futures rose 0.2% to $1,729.80/oz, while EUR/USD traded at 1.0828, largely flat.

Europe Edges Higher; Central Bank Meetings Loom

Europe Edges Higher; Central Bank Meetings Loom

By Ritu,

Capital Sands

European stock markets edged higher Wednesday, with investors cautiously optimistic ahead of key central bank meetings and as the earnings season continues.

At 4:15 AM ET (0815 GMT), the U.K.’s FTSE index traded 0.7% higher, France’s CAC 40 was down 0.2%, while the DAX rose 0.1%. The broader based Stoxx 600 Europe index climbed 0.1%.

The Federal Reserve is set to finish its two-day meeting later Wednesday but, with no change in rates expected, attention will be focused on any guidance the Fed has about the trajectory of the economy.

The focus will then turn to the European Central Bank, which meets Thursday, especially after Fitch’s decision to downgrade its rating on Italian debt to BBB-, one notch above junk.

President Christine Lagarde and her colleagues have already ramped up bond-buying of vulnerable nations, but expectations are running high that the central bank will do more Thursday, given how the region’s governments are struggling to agree on joint fiscal action.

The corporate earnings newsflow has continued Wednesday, with German car giants Volkswagen  and Daimler  both said that they expect to be profitable this year, despite big falls in sales in the first and second quarters due to the pandemic.

Shares in AstraZeneca  rose 1.6% after the drugmaker beat estimates for first-quarter profit and reiterated its 2020 outlook on Wednesday.

Barclays  climbed over 4% despite taking a 2.1 billion pound impairment charge to cover the impact of the virus, saying it was well placed to get through the crisis.

On the flip side, British Airways plans to cut more than a quarter of its jobs in response to the coronavirus crisis, its parent company IAG  said, while reporting a first-quarter operating loss of 535 million euros ($580 million), compared with a profit of 135 million a year ago. IAG shares fell 4.5% after the company also flagged further groupwide restructuring measures to come.

Planemaker Airbus Group  on Wednesday posted a 49% slump in first-quarter adjusted operating profit amid the “gravest crisis the aerospace industry has ever known”.

Oil futures bounced back Wednesday, but the recent volatility continued.

At 4:15 AM ET, U.S. crude June futures traded 16% higher at $13.94 a barrel. The international benchmark Brent contract rose 1.7% to $23.13.

Elsewhere, gold futures fell 0.4% to $1,714.60/oz, while EUR/USD traded at 1.0867, up 0.5% on the day.

Europe Posts Gains as Reopenings Draw Nearer

Europe Posts Gains as Reopenings Draw Nearer

By Ritu,

Capital Sands

European stock markets pushed higher Wednesday amid signs the region’s economic shutdown may be coming to an end, but turmoil in the oil market continued to demand a degree of caution..

At 4 AM ET (0800 GMT), the U.K.’s FTSE index traded 1% higher, France’s CAC 40 was up 0.5%, while the DAX rose 1%. The broader based Stoxx 600 Europe index climbed 1%.

Italy could start lifting strict stay-at-home orders from May 4, the country’s Prime Minister Giuseppe Conte said Tuesday, in a post on social media.

In addition, Spain’s Prime Minister Pedro Sanchez said on Wednesday his government plans to begin winding down the coronavirus lockdown measures in the second half of May.

These are the two hardest hit countries in Europe, with over 45,000 confirmed deaths due to Covid-19 combined.

Yet, gains are limited as there remains a strong sense of caution in the market, particularly with regard to oil.

At 4:05 AM ET, U.S. crude June futures traded 1.0% lower at $11.46 a barrel. The international benchmark Brent contract fell 11% to $17.25.

In corporate news, shares in Ericsson climbed 3.1% after the telecommunications equipment company backed its guidance after feeling only a limited impact from the coronavirus.

On the flip side, shares in Heineken fell 1.2% after the brewer reported a sharp drop in net profit for the first quarter as the virus hit volumes in March.

UniCredit , Italy’s largest bank, plans to take an additional loan-loss provision of 900 million euros ($977 million) for the first quarter to account for the economic impact of the coronavirus outbreak.

Elsewhere, gold futures rose 2% to $1,721.45/oz, while EUR/USD traded at 1.0865, up 0.1% on the day.

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