Fundamentals
European Stocks Rise for Fifth Day, Central Banks Keep Rates Steady
Thursday, 4 Mar 2010 7:40 EST at 19:40 by CFDTrading Analyst · Leave a Comment
Europe Session Key Developments
European stocks were mostly higher for the fifth straight trading day. The Stoxx Europe 600 Index gained 0.2 percent as national benchmark indices increased in 9 of 18 western European markets today. Stocks trended higher through most European event risk before paring their advance after a report showed pending U.S. home sales unexpectedly fell in January. Economists had forecast a 1 percent gain, while the index of purchase agreements for existing homes sank 7.6 percent. Stocks were relatively unaffected by the BoE and ECB interest rate decisions announced at 12:00 GMT and 12:45 GMT respectively. Both central banks left benchmark interest rates unchanged at 0.50 percent and 1.00 percent respectively. The BoE also decided to keep its bond-purchase program unchanged for the second month while the ECB tightened the terms of its regular three-month market operations and returned to offering such funds at a variable rate. The greenback appreciated against sterling and the euro after the respective central banks announced their rate decisions. Positive U.S. economic data also facilitated the dollar’s advance. A report from the Labor Department showed claims for U.S. jobless benefits dropped from a three-month high last week. Overall, the dollar gained 0.7 percent against its major trading partners. The CRB Commodity Index dropped 1 percent on the dollar’s advance. Natural gas was a major laggard as contracts for May delivery dropped 3.6 percent to 4.65 USD/MMBtu. Tomorrow the infamous U.S. change in non-farm payrolls should provide direction for all markets going into the weekend. Economists are currently predicting that payrolls fell 63,000 in February and that the unemployment rate will rise to 9.8 percent according to Bloomberg surveys.
FTSE 100 5527.16 -6.05 -0.11%
Commodity shares dragged British stocks lower as the CRB Commodity Index dropped 1 percent. Basic Material stocks were the worst performers as the group dropped 1.1 percent in the session. Shares of Rio Tinto and BHP Billiton both fell 1 percent. Technology stocks were on the other end of the spectrum; the group gained 1.1 percent in the session. The best performing issue of the session was Schroders which climbed 6 percent as the money manager reported record inflows for 2009.
CAC 40 3828.41 -14.11 -0.37%
Seven out of ten components declined to drag the CAC 40 down for the first time in five days. The index was paced by Vinci, the world’s biggest builder, which saw its shares climb 2.6 percent to 41.22 euros. The company reported 2009 income of 1.6 billion euros that beat analysts’ estimates. However, the positive earnings were overshadowed by GDF Suez, which contributed the most to today’s decline as its shares fell 2.7 percent. The operator of Europe’s largest natural gas network said that profit was little changed in 2009 on lower fuel prices and a slump in industrial demand.
DAX 5795.32 -22.56 -0.39%
The DAX was the worst performer among the benchmark equity indices of the five largest European economies despite more than half the components advancing. Basic Material stocks were the major laggards as the group fell 1.1 percent in today’s session. Individually, Siemens AG and BASF SE led declines in the German benchmark index. Shares in the two companies declined 1.1 and 1.2 percent respectively. Deutsche Bank, Germany’s biggest bank, was among the best performers, rising 1.4 percent, despite its credit rating being cut by Moody’s based on the company’s dependence on the securities unit.
IBEX 35 10745.30 +80.80 +0.76%
Three components advanced for every one that declined as the IBEX was one of the better performing indices in western Europe. Health care stocks performed the best as a group, gaining 1.6 percent. Financial stocks also fared very well with Banco Santander and BBVA contributing the most to the advance of the IBEX. Shares in the two companies advanced 1.1 and 1.4 percent respectively. In addition, Banco Popular posted the biggest gain on the IBEX. The stock rose 4.0 percent.
FTSE MIB 21844.56 +99.50 +0.46%
Italy’s FTSE MIB advanced for the fifth straight day paced by shares of Prysmian and Safilo Group. Shares of Safilo, the world’s second-largest maker of eyewear, climbed 13 percent after Bank of America Merrill Lynch initiated coverage of the company with a “buy” rating. Shares in Prysmian, the world’s second-biggest cable maker, rose 1.5 percent after the company said 2009 net income rose 4.6 percent from 2008. Additionally, Goldman Sachs announced it would be selling a 16.8 percent stake in Prysmian.
Written by Gary Chalik, CFDTrading Research
Please send any comments about this report to GChalik@fxcm.com
