EUROPE MARKETS: European Stocks Close Near 2-month Low On Growth Worries
16 June 2017 - 2:21AM
Dow Jones News
By Carla Mozee and Victor Reklaitis, MarketWatch
Pound gains following hawkish dissent at BOE
European stocks finished at their lowest level in nearly two
months Thursday, rattled as investors questioned the U.S. Federal
Reserve's outlook for monetary policy as signs of flagging consumer
demand have cropped up.
The Stoxx Europe 600 fell 0.4% to end at 386.05, suffering its
lowest close since April 21, according to FactSet data.
European investors on Thursday jumped out of so-called risk
assets in the wake of soft U.S. economic data Wednesday and as oil
prices remained under pressure on oversupply worries.
Fed fallout: Before the Fed met widely held expectations of
raising interest rates, weaker-than-expected U.S. retail sales were
released Wednesday and data showed a decline in consumer-price
inflation
(http://www.marketwatch.com/story/inflation-falls-again-in-may-as-cpi-recedes-from-recent-high-water-mark-2017-06-14).
Concerns about slowing in the U.S. economy, the world's largest,
also showed up in the oil market following a smaller-than-expected
decline in crude stockpiles. Gasoline supplies, meanwhile,
increased just as the U.S. summer driving season is getting under
way.
But Fed Chairwoman Janet Yellen late Wednesday indicated the
central bank remains on course with its plans to raise borrowing
costs and wind down its balance sheet.
"The key takeaway we got was that the Fed expects economic data
(particularly inflation) to rebound soon and if so, it will proceed
with its hiking plans. However, investors remain skeptical of
further near-term hikes," said Charalambos Pissouros, senior
analyst at IronFX, in a note.
"Market pricing suggests more than 50% probability that the Fed
will not raise rates again this year. Therefore, moving forward, we
expect market focus to be on incoming data and specifically,
inflation-related figures," he said.
With the prospect of a slower pace of rate increases, the Stoxx
Europe 600 Banks Index traded in negative territory for most of the
session. But it managed to rally into the close, finishing 0.2%
higher.
The euro traded at $1.1158, down from $1.1219 late Wednesday in
New York.
Other central bank updates: Investors also weighed divided views
about interest rates at the Bank of England, as the BOE voted 5-3
to hold its key interest rate at 0.25%
(http://www.marketwatch.com/story/bank-of-england-holds-key-rate-at-025-with-3-policy-makers-voting-for-a-hike-2017-06-15).
Analysts had widely expected one Monetary Policy Committee
member--at the most--to seek a rate increase.
The pound recently traded at $1.2767, up from $1.2753 late
Wednesday in New York, but down from an intraday high just shy of
$1.28 that came after the BOE news.
The Swiss National Bank on Thursday defended its oft-repeated
claim that the Swiss franc is "significantly overvalued" on
Thursday as it kept its key deposit rate
(http://www.marketwatch.com/story/swiss-national-bank-keeps-key-rate-unchanged-2017-06-15)
at minus 0.75%, where it has stood since early 2015.
Individual indexes: Germany's DAX 30 fell 0.9% to finish at
12,691.81, while France's CAC 40 retreated 0.5% to end at
5,216.88.
The U.K.'s FTSE 100 fell 0.7%
(http://www.marketwatch.com/story/ftse-100-drops-as-skepticism-over-fed-outlook-hits-risk-assets-2017-06-15)
to close at 7,419.36.
(END) Dow Jones Newswires
June 15, 2017 12:06 ET (16:06 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
FTSE 100
Index Chart
From Jun 2024 to Jul 2024
FTSE 100
Index Chart
From Jul 2023 to Jul 2024