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Asian Markets at Close Report

European Markets at Close Report

Jun 29, 2016

European Markets at Close Report, by CNBC on June 29, 2016


www.cnbc.com
European stocks soared by Wednesday's close as global markets realized that any change to the status quo in the European Union (EU) after the Brexit vote is unlikely to change in the short-term.

The pan-European STOXX 600 jumped 2.8 percent at Europe's close, with all sectors except autos closing sharply higher. London's FTSEindex posted strong gains of 3.2 percent, while the domestically-focused FTSE 250 popped 3.2 percent.
Symbol
Name
Price
 
Change
%Change
Volume
FTSEFTSE6324.17
 
183.782.99%1063776819
DAXDAX9583.56
 
136.281.44%86929955
CACCAC4182.69
 
93.842.30%107973574
IBEX 35IBEX 35 Idx8079.00
 
244.003.11%297597977
The European market rally continued through from Tuesday—after at two-day sell-off—despite uncertainty over the U.K. and European Union's future relationship, after a majority of the British public voted last Thursday to leave the bloc.
Outgoing Prime Minister David Cameron met with his European counterparts in Brussels on Tuesday to discuss the country's position following the vote. At the EU summit, pressure was applied to the U.K. to trigger Article 50 which sets in motion the process of withdrawing from the EU. But U.K. politicians have said that Article 50 will not be invoked in a rush, helping markets push higher.
"With no likelihood of Article 50 of the Lisbon Treaty getting triggered any time soon it seems that the status quo isn't likely to change in the short term," Michael Hewson, chief market analyst at CMC Markets, said in a note.
Despite the higher European markets, one analyst said that "mediocre global growth" and the European political crisis mean uncertainty will continue, and it's unlikely stocks will continue their upward trajectory.
"We have seen obviously a major sell-off on the back of this uncertainty and we haven't resolved anything. That's very important to understand and we have seen this in the past, solving issues like this in the European content takes a long time, and that means the uncertainty will be with us for a long periods of time, and in that period I cannot really see European equity markets or the U.K. advance in any major form," Sonja Laud, investment director of the Global Multi Asset Group at Baring Asset Management, told CNBC Wednesday.
Sterling recovered some of its losses seen in recent sessions, trading slightly up against the dollar, at $1.349. Overseas, a rise in oil priceshelped boost U.S. stocks in early trade, while in Asia, markets closed higher, as Brexit concerns eased.

Banks edge higher despite Brexit

The banking sector—which has been beaten up in recent months—was trading above 1.5 percent, despite some negative news for the sector.
Moody's changed its outlook on 12 U.K.-based banks Tuesday, after the country's referendum on European Union membership. Eight of the 12 banks, including BarclaysHSBC, Santander UK and TSB Bank, were downgraded to negative from stable. Shares in Barclays and HSBC were higher.
Italian banks were in focus after Italy's Prime Minister Matteo Renzi said he was talking to European institutions about how to support the country's lenders, and reports on Tuesday suggested that government money could be injected into the firms.
However, on Wednesday, an EU official told Reuters that while the European Commission was ready to support Italy's banking sector, it had not given its backing to Rome's plan to prop up the country's banks, in light of the Brexit turmoil. During the session, Italian banks pared some of their gains, including Mediobanca, currently up over 3.5 percent, and Intesa Sanpaolo and Unicredit which are also off their session highs.

Other stocks to watch

In individual stock news, Prudential shares popped over 3 percent after Barclays said the firm was the one true large-cap growth stock in the European insurance industry.
And Amec Foster Wheeler shares rose 5 percent after the company announced a £75 million five-year contract with the U.K. Ministry of Defence to supply independent nuclear propulsion safety and technical advice for the Royal Navy's submarine flotilla.
Shares of France's Alstom jumped over 5.5 percent after Goldman Sachs raised its outlook on the stock to "buy" from "neutral". Meanwhile Weir Group was one of Europe's best performer, up over 8.5 percent, after Goldman Sachs and UBS raised their target price on the stock.
A whole host of luxury stocks however were trading lower, includingSwatch GroupSalvatore FerragamoHugo Boss and Luxottica, after Goldman Sachs cut its price target on each of the stocks.
European stocks soared by Wednesday's close as global markets realized that any change to the status quo in the European Union (EU) after the Brexit vote is unlikely to change in the short-term.
The pan-European STOXX 600 jumped 2.8 percent at Europe's close, with all sectors except autos closing sharply higher. London's FTSEindex posted strong gains of 3.2 percent, while the domestically-focused FTSE 250 popped 3.2 percent.
Symbol
Name
Price
 
Change
%Change
Volume
FTSEFTSE6321.91
 
181.522.96%1074122888
DAXDAX9585.73
 
138.451.47%87479583
CACCAC4182.37
 
93.522.29%108778663
IBEX 35IBEX 35 Idx8083.00
 
248.003.17%299705855
The European market rally continued through from Tuesday—after at two-day sell-off—despite uncertainty over the U.K. and European Union's future relationship, after a majority of the British public voted last Thursday to leave the bloc.
Outgoing Prime Minister David Cameron met with his European counterparts in Brussels on Tuesday to discuss the country's position following the vote. At the EU summit, pressure was applied to the U.K. to trigger Article 50 which sets in motion the process of withdrawing from the EU. But U.K. politicians have said that Article 50 will not be invoked in a rush, helping markets push higher.
"With no likelihood of Article 50 of the Lisbon Treaty getting triggered any time soon it seems that the status quo isn't likely to change in the short term," Michael Hewson, chief market analyst at CMC Markets, said in a note.
Despite the higher European markets, one analyst said that "mediocre global growth" and the European political crisis mean uncertainty will continue, and it's unlikely stocks will continue their upward trajectory.
"We have seen obviously a major sell-off on the back of this uncertainty and we haven't resolved anything. That's very important to understand and we have seen this in the past, solving issues like this in the European content takes a long time, and that means the uncertainty will be with us for a long periods of time, and in that period I cannot really see European equity markets or the U.K. advance in any major form," Sonja Laud, investment director of the Global Multi Asset Group at Baring Asset Management, told CNBC Wednesday.
Sterling recovered some of its losses seen in recent sessions, trading slightly up against the dollar, at $1.349. Overseas, a rise in oil priceshelped boost U.S. stocks in early trade, while in Asia, markets closed higher, as Brexit concerns eased.

Banks edge higher despite Brexit

The banking sector—which has been beaten up in recent months—was trading above 1.5 percent, despite some negative news for the sector.
Moody's changed its outlook on 12 U.K.-based banks Tuesday, after the country's referendum on European Union membership. Eight of the 12 banks, including BarclaysHSBC, Santander UK and TSB Bank, were downgraded to negative from stable. Shares in Barclays and HSBC were higher.
Italian banks were in focus after Italy's Prime Minister Matteo Renzi said he was talking to European institutions about how to support the country's lenders, and reports on Tuesday suggested that government money could be injected into the firms.
However, on Wednesday, an EU official told Reuters that while the European Commission was ready to support Italy's banking sector, it had not given its backing to Rome's plan to prop up the country's banks, in light of the Brexit turmoil. During the session, Italian banks pared some of their gains, including Mediobanca, currently up over 3.5 percent, and Intesa Sanpaolo and Unicredit which are also off their session highs.

Other stocks to watch

In individual stock news, Prudential shares popped over 3 percent after Barclays said the firm was the one true large-cap growth stock in the European insurance industry.
And Amec Foster Wheeler shares rose 5 percent after the company announced a £75 million five-year contract with the U.K. Ministry of Defence to supply independent nuclear propulsion safety and technical advice for the Royal Navy's submarine flotilla.
Shares of France's Alstom jumped over 5.5 percent after Goldman Sachs raised its outlook on the stock to "buy" from "neutral". Meanwhile Weir Group was one of Europe's best performer, up over 8.5 percent, after Goldman Sachs and UBS raised their target price on the stock.
A whole host of luxury stocks however were trading lower, includingSwatch GroupSalvatore FerragamoHugo Boss and Luxottica, after Goldman Sachs cut its price target on each of the stocks.
In the commodity space, basic resources popped some 3 percent, supported by slight weakness in the dollar and a recovery in metal prices. Anglo American popped over 7 percent, with other London-listed miners GlencoreRio Tinto and Antofagasta also posting gains of 3 percent or more.
Elsewhere, oil prices edged higher, as traders poured money back into markets that have been hit by the shock of Brexit, while a potential oil workers strike in Norway and a crisis in Venezuela helped prop up prices. Brent crude was hovering above $49 a barrel, while U.S. crudetraded around $48.50.
In other news, at least 41 people have been killed and scores more wounded in what appeared to be a coordinated terror attack on Istanbul Ataturk Airport, Turkey's largest airport. A number of travel stocks including British Airways owner IAGEasyJet and Tui, fluctuated in trade as a result. TUI was also at the bottom of Europe's benchmarks, off over 4.5 percent, after JP Morgan cut its price target on the stock.