By Ryan Vlastelica

Rise in commodity prices support gains in energy stocks

European stocks closed solidly higher on Thursday, in a partial rebound from the previous session's sharp decline as Turkey's currency crisis continued to show signs of easing, and the prospect of new talks between the U.S. and China on trade gave some cause for optimism on that front.

What did markets do?

The Stoxx Europe 600 rose 0.5% to 381.43. The rise comes after the index's biggest one-day fall (http://www.marketwatch.com/story/european-stocks-inch-higher-as-turkish-lira-extends-rebound-2018-08-15) since June 25, as well as its third decline of the past four sessions. The pan-European gauge is down 1.2% thus far this week, on track for its third straight weekly drop, as well as down 2% thus far in 2018.

Germany's DAX 30 rose 0.6% to 12,237.17, a partial recovery from a 1.6% slump in Wednesday's session.

France's CAC 40 rose 0.8% to 5,349.02 in its first positive session of the past five. The index suffered its steepest one-day percentage drop since March 2 on Wednesday.

The U.K.'s FTSE 100 rose 0.8% to 7,556.38, putting an end to its longest losing streak since February (http://www.marketwatch.com/story/uk-stocks-gain-in-rebound-from-previous-sessions-drop-2018-08-16).

The euro rose slightly against the dollar, changing hands at $1.1368, compared with $1.1347 late Wednesday in New York. Thus far this year, the euro is down more than 5% against the buck.

What is driving the market?

In a potentially positive development, it was reported (http://www.marketwatch.com/story/china-says-it-will-resume-trade-talks-with-us-2018-08-16) that the Chinese Commerce Ministry would send a delegation to the U.S. later this month to resume trade talks, the first such meeting since July. The development comes at a period of elevated tensions between the two countries, which are major trading partners and which have been imposing tariffs on billions of dollars on each other's goods over the past several months. The prospect of a trade war has been one of the primary headwinds facing global equities of late.

Recent trading has been driven by the economic crisis in Turkey, which many investors fear could spread to other regions or hurt European banks, many of which have exposure to the region.

The issue will likely continue to dictate market action in the short term, and there are signs that the situation has stabilized. On Wednesday, it was reported that Qatar would invest $15 billion in Turkey (http://www.marketwatch.com/story/lira-spikes-as-qatar-pledges-to-invest-15-billion-in-turkey-2018-08-15), which could provide something of a lifeline.

The Turkish lira was on track for its third straight session with a pronounced gain against the dollar, fueling hopes that the recent all-time low represented a bottom. The lira gained 2.8% on the dollar Thursday, bringing its week-to-date move against the greenback to more than 11%. However, it is still down more than 15% thus far in August.

Don't miss:Turkey's woes won't trigger a full-blown crisis across emerging markets, economist says (http://www.marketwatch.com/story/why-turkeys-crisis-doesnt-spell-doom-for-all-emerging-market-currencies-2018-08-14)

See also:How the lira selloff compares to Turkey's previous crises (http://www.marketwatch.com/story/how-the-lira-selloff-compares-to-turkeys-previous-crises-2018-08-14)

A recovery in commodity prices added to the positive tone on the day. Brent-crude futures rose 0.5%, helping fuel a recovery in some of the large-capitalization commodity stocks that were among Wednesday's biggest decliners. BHP Billiton PLC. (BLT.LN) gained 1.6% in morning trading, while BP PLC (BP.LN) was up 0.5%.

What are market analysts saying?

"European shares are moving gingerly higher and the European currencies are gaining some ground against the dollar as the focus turns back to company news and earnings and away from the Turkish lira, which has now stabilized against the dollar after the onslaught early this week," said Fiona Cincotta, senior market analyst at City Index.

What stocks are in focus?

Kingfisher PLC (KGF.LN) fell 4.8% after it reported its second-quarter results (http://www.marketwatch.com/story/kingfisher-q2-sales-grew-after-harsh-weather-in-q2-2018-08-16).

Rank Group PLC (RNK.LN) tumbled 2.8% after the company said its annual profit fell sharply (http://www.marketwatch.com/story/rank-group-shares-fall-after-results-2018-08-16), citing tough conditions for its Grosvenor Casinos business, though it said it expects to meet consensus expectations for the current year.

Marshalls PLC (MSLH.LN) surged 14.4% after reporting its results (http://www.marketwatch.com/story/marshalls-rises-after-reporting-revenue-growth-2018-08-16).

Germany's Henkel AG & Co. (HEN.XE)cut its 2018 earnings per share growth guidance (http://www.marketwatch.com/story/henkel-cuts-guidance-for-2018-adjusted-earnings-2018-08-16) to between 3% and 6% and raised its adjusted EBIT margin guidance to around 18%. After initially falling, shares ended with a gain of less than 0.1%.

JC Decaux SA (DEC.FR) gained 7.1% after Berenberg upgraded the stock (http://www.marketwatch.com/story/jcdecaux-rallies-after-berenberg-upgrade-2018-08-16).

Among microcaps, Ashley House PLC (ASH.LN) jumped 10.9% after it reported an increase in its annual profit (http://www.marketwatch.com/story/ashley-house-rallies-after-results-outlook-2018-08-16) that was partly driven by the reversal of a previous impairment.

 

(END) Dow Jones Newswires

August 16, 2018 12:17 ET (16:17 GMT)

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