European stocks hold to small gain as techs rise, with eye on U.S. bank earnings
How markets are performingThe Stoxx Europe 600 index SXXP, +0.23% was up 0.1% at 384.77, aided by advances for industrial and consumer services shares, but the telecom and oil and gas groups were lower. The index on Thursday rose 0.8%.
For the week, the pan-European benchmark was on course to add 0.6%, and that would mark a second straight weekly rise.
U.K. stocks put in the strongest performance, with the U.K.’s FTSE 100 index UKX, +0.27% up by 0.6% to 7,698.64. France’s CAC 40 index PX1, +0.41% rose 0.4% to 5,429.19, and Germany’s DAX 30 index DAX, +0.42% tacked on 0.1% to 12,510.16.
But Spain’s IBEX IBEX, -0.35% was down 0.2% at 9,746.40. There, bank shares of Banco Santander SA SAN, -0.65% fell 0.6% and supermarket chain Distribuidora Internacional de Alimentacion SA DIA, -15.25% down 5%.
The euro EURUSD, -0.0257% fell to $1.1620 from $1.1671 late Thursday. The pound GBPUSD, +0.0833% traded at $1.3120, down from $1.3206.
What’s driving the marketU.K.-listed shares stood out as they headed toward their sixth win in seven trading sessions. They were largely bolstered as the pound fell against major rivals. Sterling weakness can lift revenue made overseas by multinational companies, which are heavily weighted on the U.K.’s FTSE 100 index.
The pound fell after U.S. President Donald Trump, in an interview with The Sun newspaper published late Thursday, said U.K. Prime Minister Theresa May’s plan for a so-called soft Brexit would damage the likelihood of a trade deal between Britain and the U.S.
“If they do a deal like that, we would be dealing with the European Union instead of dealing with the U.K., so it will probably kill the deal,” said Trump, whose comments were published as May hosted a formal dinner for Trump on Thursday night.
May’s government on Thursday published a 120-page report that provided further details on the vision for the U.K.’s future relationship with the European Union, which was agreed at a Cabinet meeting last week. The strategy calls for frictionless trade in goods between the U.K. and the EU, prompting critics to say that wouldn’t amount to a clean break by the U.K. from the bloc.
Meanwhile, the Stoxx Europe 600 Banks Index FX7, +0.14% was up just 0.1% before a round of earnings from large U.S. banks were released Friday, with results due from JPMorgan Chase & Co. JPM, +0.54% , Citigroup Inc. C, -2.69% and Wells Fargo & Co. WFC, -2.00% which should help set the tone for the new earnings season.
The Stoxx Europe 600 Technology Index FX8, +0.26% moved up 0.5%, with that group keying off Thursday’s rally in tech stocks on Wall Street that pushed the Nasdaq Composite COMP, +0.24% to its first record close since June 20.
What strategists are saying“Expectations [for earnings] are high, and for dominant U.S. banks at least, prospects are solid in view of rising rates, and unabated improvement in inflation, output, growth and the labor market in the first half of the year. This helps account for Wall Street’s expectation of a 21% advance in earnings growth for financials in Q2, and a close to 21% from all S&P 500 companies as a whole,” said City Index market analyst Ken Odeluga in an note.
“With earnings expectations in Europe more modest, resignation could be even swifter in the event of disappointment in coming weeks,” Odeluga added, who noted that expectations are for 3% growth in net income for Stoxx 600 companies, excluding the volatile energy-sector earnings, according to the consensus forecast from Thomson Reuters.
“Aside from chronically sluggish utilities and amongst large telecoms, dips in technology, and health-care sector earnings should also be a worry,” he said.
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Stock moversAltran Technologies SA ALT, -27.96% plunged 26% after the engineering firm said it found at least $10 million in forged purchase orders in the accounts of Aricent, which it recently bought for 1.7 billion euros ($1.9 billion).
Hays PLC HAS, +8.16% jumped 6.9% as the recruitment company said it expects full-year operating profit to be marginally ahead of consensus expectations on growth in most of its markets.
Siemens Healthineers AG shares SHL, -2.75% fell 3% following a ratings downgrade to hold from buy at Deutsche Bank, saying a more than 30% rally from the initial public offering reflects prospects for the medical technology company to deliver on its strategic goals.
DCC PLC DCC, +3.62% leapt 3.6% after the support-services group backed its outlook for fiscal 2019 and said it acquired two businesses for a combined value of £110 million ($145 million).