By Carla Mozee, MarketWatch
Chinese growth concerns were the one big drag on the market and
mining stocks
Stocks across Europe surged by the most in more than two months
as the euro got walloped following the European Central Bank's
policy decision to wrap up crisis-era bond purchases by the end of
2018 and keep interest rates low for at least another year.
The ECB's plan's to bring its easy-money programs to an end, on
the back of an improving economic picture in Europe, were widely
expected. However, the euro may have gotten slammed by the degree
of caution expressed by European policy makers in outlining the
initiative to return to normal.
How markets are performing
The Stoxx Europe 600 Index rose by 1.2% to 393.04, marking its
best day, on a percentage basis, since April 5 and hitting its
highest close since May 22, according to WSJ Market Data Group. On
Wednesday, the pan-European benchmark rose 0.2%
(http://www.marketwatch.com/story/european-stocks-inch-higher-as-traders-brace-for-feds-next-move-2018-06-13).
Germany's DAX 30 index also flipped higher, to up 1.7% to
13,107.10, also finishing around a three week high, while France's
CAC 40 index climbing up 1.4% to close at 5,528.46.
Spain's IBEX 35 advanced 0.6% at 9,957.70, and Italy's FTSE MIB
index picked up 1.2% to 22,486.32.
Read: The ECB can't rescue Italy from its next crisis
(http://www.marketwatch.com/story/italy-never-should-have-joined-the-euro-and-the-ecb-cant-rescue-it-from-its-next-crisis-2018-06-11)
The U.K.'s FTSE 100 rose 0.8% to 7,765.79.
The euro bought $1.1688, pulling back from a jump to $1.1852
right after the ECB statement was released. The shared currency
traded at $1.1791 late Wednesday in New York.
What's driving markets
European bourses stepped higher after the European Central Bank
said it would continue its program of buying 30 billion euros a
month of bonds through September, as planned. The purchase amount
will then be reduced in October to 15 billion euros a month and run
through the end of December. The purchases will end in
December.
The ECB also said it plans to keep reinvesting principal
payments from maturing securities purchased under the
asset-purchase program "for an extended period after the end of the
net asset purchases" and as long as policy makers feel its
necessary to provide an ample degree of accommodation.
On interest rates, the ECB said rates will remain at their
present all-time lows "at least through the summer of 2019." The
Stoxx Europe 600 Banks Index rose 0.3%, somewhat lagging larger
gains for other sectors.
ECB President Mario Draghi, at a press conference in Riga,
Latvia, said the central bank now sees 2018 eurozone growth at
2.1%, down from a previous forecast of 2.4%.
Mining stocks pared an earlier decline, with some finishing the
session in the green, shaking off downbeat data out of China, the
world's largest buyer of copper and a major buyer of other
industrial and precious metals. Business activity in China slowed
in May, and readings on industrial output, retail sales and
fixed-asset investment from the National Bureau of Statistics fell
short of expectations
(http://www.marketwatch.com/story/business-activity-slows-in-china-in-may-2018-06-14).
Investors also took notice of a decision by the People's Bank of
China to stand pat on interest rates
(http://www.marketwatch.com/story/boc-stands-pat-on-rates-fails-to-follow-fed-as-usual-2018-06-14),
breaking a pattern of raising rates in the footsteps of the U.S.
central bank.
The Stoxx Europe 600 Basic Materials Index reversed course to
end up 1.2%. Copper producer Antofagasta PLC (ANTO.LN) ended the
session down 1.5%, off its lows of the day, while shares of
Centamin PLC edged 0.2% lower, also cutting a steeper drop and
Glencore PLC (GLEN.LN) pivoted in to the green, closing 0.1%
higher.
As expected, the U.S. Federal Reserve on Wednesday lifted its
benchmark federal-funds rate by a quarter-percentage point--to a
range of 1.75% to 2%. It also signaled it will raise rates a total
of four times in 2018
(http://www.marketwatch.com/story/fed-hikes-interest-rates-now-sees-4-moves-this-year-2018-06-13),
compared with a previous outlook for three hikes. Wednesday's rate
increase was the second of the year.
What strategists are saying
"The shock announcement that the ECB will keep rates unchanged
at least until mid-2019 has caused the euro to spiral lower. Whilst
the information itself shouldn't shock markets, the decisive
comments today isn't the usual style we see Mr. Draghi epitomize at
monthly meetings," said Alex Lydall, head of corporate FX at Foenix
Partners, in a note.
"Although negative connotations are attached to the new rate
information, Draghi did also note that asset purchases will extend
to December, but only at a rate of 15 billion euros a month. This
news will fill traders with confidence that the eurozone is
stepping out of its troubled shadow, albeit at snail's pace," he
added.
Stock movers
Aveva Group PLC (AVV.LN) rallied 12%. The industrial-software
company said it was maintaining its dividend even as fiscal 2018
pro forma pretax profit fell 34%
(http://www.marketwatch.com/story/aveva-2018-profit-falls-34-on-reverse-takeover-2018-06-14),
stemming in part from reverse acquisition by France's Schneider
Electric SE (SU.FR)
Unilever PLC (ULVR.LN) (ULVR.LN) fell 2.8%. The consumer-goods
maker's CFO Graeme Pitkethly warned sales growth in the first half
of 2018 will be below the full-year target of 3% to 5%
(http://www.marketwatch.com/story/unilever-extremely-unlikely-to-be-in-ftse-cfo-2018-06-14)
, but maintained sales guidance for the year. Pitkethly also said
it is "extremely unlikely" Unilever will maintain a primary listing
in London after its move to consolidate in Rotterdam.
Shares of European payment processor Adyen NV (ADYEN.AE) fell
3.7% to EUR438, briefly reaching a high of EUR484 on the Euronext
Amsterdam exchange Wednesday doubled during that session. The
shares had priced at EUR240 each.
Read:Adyen IPO: 5 things to know about the PayPal rival
(http://www.marketwatch.com/story/adyen-ipo-5-things-to-know-about-the-paypal-rival-2018-06-11)
Rolls-Royce Holdings PLC shares (RR.LN) jumped 6.5% after the
British aircraft-engine maker said it would cut 4,600 jobs
(http://www.marketwatch.com/story/rolls-royce-to-cut-4600-jobs-in-restructuring-2018-06-14)
in its latest round of job reductions.
Economic data
Retail sales for the U.K. in May surpassed consensus forecasts,
as a stretch of good weather and Royal Wedding celebrations gave a
fillip to spending in food and household goods stores.
Sales were up 1.3% on the month, the Office for National
Statistics said. A print of 0.5% was expected. They were up 3.9%
year-over-year, compared with 2.4% expected in a FactSet consensus
estimate.
(END) Dow Jones Newswires
June 14, 2018 14:21 ET (18:21 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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