EUROPE MARKETS: European Markets Search For Direction From U.S.-China Trade Signals
22 May 2019 - 8:02PM
Dow Jones News
By Dave Morris
European markets seesawed from negative to positive as investors
struggled to digest conflicting signals on U.S.-China trade.
How did markets perform?
The Stoxx 600 was flat at 379.4, after ticking up 0.5%
Wednesday.
The U.K.'s FTSE 100 rose 0.5% to 7,368.1, adding to Wednesday's
gain of 0.2%
The pound gave back much of Wednesday's gains, sinking 0.3% to
$1.2671. It was up 0.4% Wednesday.
In Germany, the DAX edged up 0.1% to 12,158.2. On Wednesday, it
increased by 0.8%.
France's CAC 40 dipped 0.1% to 5,377.8. It gained 0.5%
Wednesday.
Italy's FTSE MIB dropped 0.2%, falling to 20,667.8 after posting
an increase of 0.8% Wednesday.
What's moving the markets?
The picture for China-U.S. trade negotiations remains full of
noise and static. On the positive side of the ledger, China's
Washington Ambassador Cui Tiankai said the country was ready to
continue talks, telling Fox News that "our door is still open"
(https://www.reuters.com/article/us-usa-trade-china-diplomacy/china-ready-for-further-u-s-trade-talks-ambassador-says-idUSKCN1SR2K3).
On the negative side, Tiankai blamed the U.S. for changing its mind
"overnight" and breaking the tentative deal reached in previous
negotiations. Meanwhile, the U.S. considered adding more Chinese
companies to its blacklist, which already includes Huawei. The New
York Times reported
(https://www.nytimes.com/2019/05/21/us/politics/hikvision-trump.html)
that video surveillance equipment firm Hikivision Digital
Technology could potentially be restricted from buying U.S.
technology.
U.K. Prime Minister Theresa May's concessions to her Brexit deal
were met with predictable scorn from hard-line Brexiteers within
her own party, as well as the opposition Labour Party, according to
media reports. Labour leader Jeremy Corbyn called it a "rehash of
her bad old deal",
(https://www.thetimes.co.uk/edition/news/tories-reject-may-s-final-attempt-at-brexit-deal-jzhtcv3hz)
while Conservative leadership contenders Boris Johnson and Dominic
Raab were staunchly critical. Environment secretary Michael Gove,
an influential Brexiteer, indicated on the BBC's Today radio
program that the proposal may not be brought forward for a
vote.
The succession races for several top jobs in European politics
are heating up. The Financial Times reported
(https://www.ft.com/content/971433e0-7bbb-11e9-81d2-f785092ab560)
that European Central Bank President Mario Draghi, whose term will
end October 31, could be succeeded by Germany's Jens Weidmann. The
Bundesbank president was a noted critic of the ECB's aggressive
response to slowing economic growth.
In economic data, the U.K. reported lower than expected
inflation. Purchasing Power Index (PPI) output in April was 2.1%
higher than a year ago, though lower than predictions of 2.3%.
Investors will be looking ahead to the release of the U.S. Federal
Reserve's Federal Open Market Committee minutes.
Which stocks are active?
Marks & Spencer Group PLC (MKS.LN) shares were down 4.1%
after it reported its fiscal 2019 profits were dented by
restructuring costs. It also announced details of a GBP601.3
million rights issue, signaled in February, to fund its joint
venture with online grocer Ocado Group PLC(OCDO.LN). Adjusted
pretax profit fell 10% to GBP523.2 million. Citi analysts said the
costs were "funding an exciting new chapter in the M&S
investment case".
Royal Mail PLC (RMG.LN) jumped 5.5% despite delivering the
unwelcome news that the privatized postal service's dividend would
be cut in order to fund investment in new services. Neil Wilson,
chief market analyst for Markets.com, noted that the fiscal 2019
results showed parcel growth offsetting declines in letter volumes,
and that spending on parcel-related services would help compete in
an Amazon-driven mail-retail world. "Today's strategy update means
going all in on parcels--it's about time," he wrote.
(END) Dow Jones Newswires
May 22, 2019 05:47 ET (09:47 GMT)
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