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EUROPE MARKETS: European Markets Stage Rebound After Monday Malaise

Europe markets bounced after Monday’s selloff but for the most part, they didn’t erase the day’s losses.

How did markets perform?

The Stoxx 600 moved up 0.4% to 378.9, retracing some of Monday’s 1.1% loss.

The U.K.’s FTSE 100 is higher at 7,767.2, rising 0.8% to more than wipe out Monday’s 0.5% decline.

The pound was hit harder, shrinking 0.3% to $1.2685, a four-month low.

Italy’s FTSE MIB recaptured part of its 2.7% plunge Monday, increasing 0.7% to 20,680.7 on Tuesday.

In Germany, the DAX (DAX) edged up 0.2% to 5,367.2. On Monday it fell 1.6%.

France’s CAC 40 rose 0.6% to 12,111.8, after sinking 1.5% Monday.

What’s moving the markets?

U.S. officials granted Huawei a temporary reprieve from some of the restrictions imposed on Friday. The Chinese telecommunications company caught in the U.S.-China trade dispute was granted a 90-day window to purchase equipment and parts needed to maintain existing activities, which may be renewed. The easing won’t likely mitigate the fallout from Google’s announcement that it had suspended all business with Huawei not involving open source software, which could freeze the company’s consumer handsets out of Google’s Android operating system and various apps.

The “new and improved” Brexit deal promised by U.K. Prime Minister Theresa May is expected to contain promises on workers’ rights and environmental protections, and will seek cabinet approval on the concessions, according to the latest report in The Times (https://www.thetimes.co.uk/article/may-will-ask-cabinet-to-agree-on-concessions-cnswxbqkw). The move will put pressure on opposition Labour Party leader Jeremy Corbyn as some M.P.s may now support the bill, but many in the rank-and-file will staunchly oppose it without the promise of a confirmatory second Brexit referendum.

The U.K. pound took a drubbing Tuesday, falling to a four-month low. Neil Wilson, chief markets analyst for Markets.com, said Brexit uncertainty and U.S. dollar strength were the two key drivers: “As far as Brexit goes there it is still as clear as mud and traders are de-risking from the pound….we are heading to either no-deal or no Brexit, a binary outcome that will keep traders on the side lines.”

Another batch of May economic data is due Tuesday. In the U.K., the CBI industrial trends total orders survey showed that in May, orders fell to -10, a sharp decline after a run-up in manufacturing driven by stockpiling for the now-aborted March 29 Brexit date. The figure was the lowest since October 2016.

In the Eurozone the consumer confidence flash prediction is expected to be down 7.7%.

Which stocks are active?

German chip maker Ams popped 6.8% after a bloodbath Monday for Huawei’s technology and equipment suppliers, when the shares closed down 13.4%.

Telecom Italia shares rose 0.8% even though the company reported first quarter net profit that was lower than the quarter a year ago. The Italian company cited the change to accounting standard IFRS 16 as driving the figure to EUR165 million, versus EUR199 million in the first quarter of 2018. Absent that accounting related hit, first quarter 2019 standard net profit was EUR193 million, the company said.

Entertainment One fell 2% after reporting fiscal 2019 earnings, as pretax profit fell 43% year over year. The company blamed the dip on one-off charges, and pointed to strong underlying earnings from growth in family-oriented brands such as Peppa Pig as well as higher margins in its film, television and music unit.

Sentiment around sales of U.K. mortgages took a hit as Nationwide Building Society reported pressure on pricing in the mortgage market in its fiscal 2019 earnings. Tesco Bank, the lending arm of supermarket chain Tesco, said Tuesday that it was exiting the mortgage market and looking for a buyer of its existing mortgage assets, citing “challenging market opportunities”. Shares in the unit’s parent traded 0.6% higher.
Source: Dow Jones

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