EUROPE MARKETS: European Stocks Step Lower As Trump-Kim Pledge 'lacks Some Detail'
12 June 2018 - 9:10PM
Dow Jones News
By Carla Mozee, MarketWatch
Gains for European stocks largely faded Tuesday, with investors
considering results of U.S. President Trump's unprecedented summit
with North Korean leader Kim Jong Un in Singapore.
How markets are performing
The broader Stoxx Europe 600 Index slipped by less than 1 point
to 387.80 after rising as much as 0.4%. The basic materials and oil
and gas groups led declining sectors, but the utility and tech
groups moved higher. On Monday, the index rose 0.7%
(http://www.marketwatch.com/story/italian-stocks-jump-on-reassuring-euro-remarks-leading-european-markets-higher-2018-06-11),
the first rise in five sessions.
Germany's DAX 30 index flipped down, losing 0.1% to 12,827.12.
France's CAC 40 index reversed course and fell 0.3% to
5,454.63.
In London, the FTSE 100 fell 0.3% to 7,712.46, also giving up
early gains.
But Spanish and Italian stocks advanced. Spain's IBEX 35 was up
0.5% to 9,943.00, and Italy's FTSE MIB index rose 0.3% to
22,148.03. That extended Monday's 3.4% leap, seen after Italy's
economy minister said the country's new coalition government is
committed to eurozone membership.
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)
Investors continued to snap up Italian debt, driving down the
yield on Italy's 2-year note by 24 basis points to 0.84%, according
to Tradeweb. Yields fall when bond prices rise. The yield on
10-year fell 8 basis points to 2.7%.
The euro traded at $1.1796, slightly higher than $1.1785 late
Monday in New York.
What's driving markets
European bourses started to retreat after posting gains at the
open. When trading got underway, Trump and Kim had signed a joint
document pledging to work toward the complete denuclearization of
the Korean Peninsula
(http://www.marketwatch.com/story/trump-kim-sign-document-to-wrap-up-korean-summit-2018-06-12),
but the statement was criticized as lacking detail on the
verification of the process.
The meeting was unprecedented as it was the first between a U.S.
sitting president and a North Korean leader.
"The lack of a response [in the markets] though may be a
reflection of the fact that the agreement still lacks some detail
and given the unpredictable and volatile nature of the two leaders,
there's no guarantee that it won't run into significant
difficulties. Still, progress is important which makes today a big
success," said Craig Erlam, senior market analyst at Oanda, in a
note.
Meanwhile, the Brexit issue returns to the fore, as U.K.
lawmakers in the House of Commons will begin debating amendments by
the House of Lords to the bill that takes the U.K. out of the
European Union. The 15 amendments include a measure to keep the
country in the EU's customs union.
Prime Minister Theresa May's Conservative government runs the
risk of losing its bid to overturn some of the amendments if enough
Conservative lawmakers decide to vote alongside opposition
parties.
Central banks in motion
Beyond geopolitics, traders are focusing on central-bank
meetings this week. The Federal Reserve begins its two-day meeting
on Tuesday and markets expect an interest-rate hike
(http://www.marketwatch.com/story/feds-goal-is-to-signal-an-unhurried-pace-of-interest-rate-hikes-2018-06-08)
on Wednesday. On Thursday, European Central Bank policy makers are
expected to announce the timing for unwinding its bond buying. The
Bank of Japan will release a policy update Friday.
"There seems to be suggestions that the ECB is going to reduce
QE, but I'm scratching my head on how they can actually do that.
Industrial production in Germany and France has slowed, credit
growth has slowed, retail sales are slowing," said Kully Sumra,
vice president of international services at Charles Schwab, in an
interview.
"And the Bank of Japan ... looks like they've may have reached a
cyclical corner and things might be slowing down a little. This
week is really going to be marked by a continuing divergence
between the three big central banks. The Fed has a very clear path
in terms of hiking rates and the ECB and the Bank of Japan, much
less so."
Check out: How stock investors can profit from this week's Fed
meeting
(http://www.marketwatch.com/story/how-stock-investors-can-profit-from-this-weeks-fed-meeting-2018-06-12)
Stocks in focus
French retailer Casino Guichard-Perrachon SA (CO.FR) climbed 3%,
but pared bigger gains, after it revealed plans to sell non-core
assets worth about 1.5 billion euros ($1.77 billion)
(http://www.marketwatch.com/story/casino-shares-rise-on-15-bln-asset-disposal-news-2018-06-12)
to accelerate its debt-reduction efforts in France.
Economic data
Basic wages in the U.K. rose 2.8% in the three months to April,
the Office of National Statistics said Tuesday. Analysts polled by
FactSet were looking for a 2.9% rise in wages excluding bonuses.
The unemployment rate remained at 4.2%, meeting expectations.
(END) Dow Jones Newswires
June 12, 2018 06:55 ET (10:55 GMT)
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