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Jun 22, 2016

European Markets at Close Report, by CNBC on June 22, 2016: Stocks Close Sharply Higher Ahead of UK Brexit Vote

Arjun Kharpal, Alexandra Gibbs
European equities posted strong gains by Wednesday's close, as investors prepared for the following day when the U.K. votes in its referendum on the European Union.

The pan-European STOXX 600 ended trade up 0.9 percent provisionally, despite coming under pressure earlier in the session.
All major bourses closed 1 percent or higher, while sectors posted positive gains, helped by a positive session in the U.S. In Asia however, markets closed mixed, with Japanese shares closing in the red.


FTSE FTSE 6285.08
58.53 0.94% 619400265
DAX DAX 10131.94
116.40 1.16% 59275293
CAC CAC 4410.43
43.19 0.99% 69818054
IBEX 35 IBEX 35 Idx 8760.50
93.20 1.08% 148918311

European stocks have remained on edge this week, as the U.K.'s referendum on its EU membership draws closer. Broadly, opinion polls show that support for the remain and leave camps is neck-and-neck, making the result too close to call and that could stoke further volatility in financial markets.

"Recent market moves have been pricing in a remain vote but, with opinion polls indicating that the vote is too close to call, the markets are likely to be extremely volatile and, with many investors on the sidelines, the lack of liquidity will exaggerate the moves," Mic Mills, head of client services at Capital Index, said in a Wednesday note.
Politicians on both sides of the debate will be making their last arguments today ahead of polling stations opening tomorrow at 07:00 a.m. London time.
Global investors are also digesting comments made by U.S. Federal Reserve Chair Janet Yellen on Tuesday. Beginning her two-day testimony before Congress, Yellen said in prepared remarks that a cautious approach to monetary policy remains appropriate and while the pace of improvement in the labor market has slowed, it's important not to overreact to one or two labor reports. Yellen added that a U.K. vote to leave the EU could have significant economic repercussions.

Oil, miners post modest gains

Oil prices rose in European trading on Wednesday, with U.S. crude joining Brent above $50 a barrel after data from the American Petroleum Institute (API) showed a larger than expected draw on inventory, Reuters reported.
In the oil and gas space, Norway's Statoil jumped over 2 percent after chief executive Eldar Saetre told the Wall Street Journal that big efficiency gains were helping the oil company lower the cost of its projects globally. Meanwhile Petrofac was in the red, after Exane BNP Paribas cut its target price on the stock.
Elsewhere in the commodity space, metal prices were broadly higher as fears over Brexit wane, which helped prop up most stocks in basic resources, including Glencore, Anglo American and BHP Billiton. ArcelorMittal was lower however, despite Citigroup raising its price target for the stock.

Banks in focus; VW scandal continues

Banks continue to remain in focus ahead of the U.K.'s referendum vote. Several London-listed banks were posting solid gains, including HSBC and Royal Bank of Scotland. Standard Chartered led the sector higher, up around 3 percent.
Shares of Swiss bank Julius Baer was up 1.5 percent, after Citigroup raised its price target and rating on the stock.
In individual stock news, H&M reported a sharp 17 percent decline in pretax profit year-on-year in the second quarter hit by a strong dollar and weak sales growth. Shares in the Swedish retailer however were up 1.5 percent.
Spain's Merlin Properties popped 4 percent, making it one of Europe's best performers, after the firm agreed to a merger with Metrovacesa.

Volkswagen confirmed on Tuesday that board member Herbert Diess was being probed by German regulators who are investing allegations of market manipulation related to the carmaker's diesel emission scandal. Former chief executive Martin Winterkorn is also under investigation. Volkswagen said it had seen no evidence of market manipulation. Shares in the firm were higher ahead of the AGM taking place Wednesday.
And Air France-KLM shares reacted positively to the news that the airline's pilots have canceled a planned four-day strike.