Aug 1, 2019

Europe | Europe Markets Closing Report on Thursday 1, August 2019 | European stocks close higher on strong earnings; Bank of England holds rates

Elliot Smith

European stocks traded higher Thursday after strong earnings reversed early losses resulting from a more hawkish tone from the U.S. Federal Reserve.

European Markets: FTSE, GDAXI, FCHI, IBEX

FTSEFTSE 100FTSE7577.51-9.27-0.12590145856
The pan-European Stoxx 600 closed provisionally 0.41% higher, led by a 2.2% gain for financial services stocks. Basic resources plummeted 3.2% on the back of a steep loss for Tenaris after the Luxembourg-based steel company missed second-quarter earnings expectations.
In the U.K., the Bank of England’s Monetary Policy Committee voted unanimously to hold interest rates steady at 0.75% and cut its growth forecast in the face of increased Brexit worries and a slowing global economy.
The BOE gave no indication that it was considering lowering interest rates. Its forecasts assume Britain avoids a sudden Brexit shock, but the central bank lowered its growth forecast to 1.3% for 2019 and 2020, down from 1.5% and 1.6% respectively.
The pound slipped a further 0.5% against the dollar, continuing its steep decline to hover just above the $1.21 mark, having dropped below it earlier in the session. The currency held steady following the BOE announcement.
The FTSE 100 was the only major European index to lose value, slipping 0.07%.
Markets earlier reacted to the Fed’s first cut to its main interest rate since 2008 on Wednesday, after Chairman Jerome Powell cited signs of a global slowdown, simmering U.S. trade tensions and persistent low inflation in the central bank’s decision to lower borrowing costs by 25 basis points.
However, Powell suggested the cut was a “mid-cycle adjustment to policy” rather than the start of an aggressive monetary easing cycle.
On the data front, U.K. PMI (Purchasing Managers’ Index) data showed British manufacturers’ output in July fell by the most in seven years as Brexit worries and weaker global demand weighed on factories.

Earnings in focº us

Societe Generale on Thursday reported a second-quarter net income of 1.05 billion euros ($1.16 billion), surpassing analyst expectations according to Reuters’ estimates. The French bank posted a net income of 1.2 billion euros for the same quarter last year. Societe Generale stock gained 5.7% by afternoon trade.
British bank Barclays beat analyst expectations by reporting a second-quarter net profit of £1.03 billion ($1.25 billion), compared to £1.2 billion in the same period a year earlier. Barclays stock traded 1.3% higher.
ING Groep, the Netherlands’ largest bank, cautioned on Thursday that rock-bottom interest rates will pressure future earnings as it announced a higher-than-expected profit of 1.4 billion euros in the second quarter of the year. The bank’s shares slipped 2.3% during trade.
Royal Dutch Shell’s second quarter profits slumped to a 30-month low due to lower oil and natural gas prices and refining margins, falling far short of forecasts and leading the company’s shares 4.9% lower.
British medical device company Convatec saw its shares soar 17.9% after reporting its first-half results, while British public and private services provider Capita jumped 17.3% to the top of the Stoxx 600 after the company’s results showed it is on track to meet its 2020 turnaround target.
Shares of Zalando jumped 13.3% after the German online retailer raised its profit guidance.
At the other end of the European blue chip index, chipmaker AMS saw its share price shed 6.1% after hitting its highest since September on Wednesday.

Source: CNBC

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