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European Markets Summary

London Stocks End Sharply Higher; Fed Eyed

FTSE 100 closes 2.4% higher at 5384.11, amid signs that efforts are being stepped up to help Spain’s ailing banking sector. At the same time, expectations of further stimulus by the US Fed are mounting. “It’s now down to Ben Bernanke tomorrow to provide a further boost to the markets in order to keep the recent rally going,” a trader says. “Only 69,000 jobs were added in the private sector last month, prompting calls for further QE in the world’s largest economy. If these calls are once again ignored, we could see negativity return to the markets in the lead-up the Greek elections.” Bernanke is due to testify Thursday before the congressional joint Economic Committee. Banks and miners gain, with Vedanta Resources +9% and Barclays +8.2%.

Frankfurt Stocks Close Sharply Higher

DAX closes 2.1% higher at 6093.99, with a boost from gains on Wall Street late in the session. Although traders speak of disappointment after the ECB leaves its key rate unchanged, there is hope of help from monetary policy measures in future as ECB President Draghi hasn’t ruled out any options. Cyclical stocks are the major gainers Wednesday. HeidelbergCement closes 4.8% higher, Infineon +3.9%. MAN ends down 1.2% as Wednesday’s gains proved a little excessive with the news of Volkswagen raising its stake being no surprise, a trader says.

Paris Stocks Close Sharply Higher

CAC-40 closes 2.4% ahead at 3058.44, trading higher early in the day on optimism ahead of the ECB rate announcement and gaining further ground later on comments from Atlanta Fed President Lockhart, says a Paris-based trader. “The ECB President’s speech partially erased gains briefly, but the US positive trend lifted French stocks as Lockhart’s speech made investors hopeful that the Fed will announce further stimulus,” he says. LVMH ends 4.2% higher following an upgrade by HSBC. Thursday’s scheduled data releases include US weekly jobless claims at 1230 GMT; Fed Chairman Bernanke testifies from 1400 GMT.

Zurich Stocks Close Sharply Higher

SMI ends 1.9% higher at 5822.63, amid improving sentiment buoyed mainly by the ECB decision to keep rates on hold as expected. All stocks except Synthes – which says it may be delisted as early as next week and closes flat – close in the black after what a trader describes as “a very happy day.” Financials and cyclicals are the biggest gainers with UBS +4.2%, Julius Baer +3.6% and Credit Suisse +3.3% following similarly strong performances in the US, while Adecco and ABB end 4.1% and 2.5% higher respectively. Roche and Novartis close +2.3% and +1% after both companies report positive clinical data at the EULAR medical congress. Thursday, eyes will be on Swiss unemployment data and consumer price index.

Amsterdam Stocks Close Sharply Higher

AEX ends 2.3% higher at 291.39, as financial markets are boosted by hopes that central banks will take additional steps to help the ailing economies in Europe and the US. Among the heavyweights, ING gains 4.3%, Philips rises 3.8% and Unilever adds 1.6%. Bucking the trend is Ahold, down 3.9% after a disappointing 1Q report.

Brussels Stocks Close Sharply Higher

Bel-20 closes 2.4% higher at 2104, in line with bourses across Europe following signs that the ESM permanent bailout mechanism may inject capital directly into troubled banks, and as the ECB leaves its key rate unchanged. Banks are the sharpest risers in Brussels, with KBC ending the session +6.4% and Ageas rising 4.8%

Nordic Stocks Finish Sesson Higher

Nordic equity markets close higher, rebounding from recent losses as investors pick up battered stocks and look forward to Thursday’s testimony by US Fed Chairman Ben Bernanke who will be scrutinized for clues on more quantitative easing. Volumes are thin, however, as the Stockholm market is closed Wednesday. OMXN40 ends 0.9% higher at 881.01, OBX +3% higher at 354.98. Nokia gains 4.4% after announcing three new non-smartphone devices in an effort to defend its weakening position in developing markets.

Milan Stocks End Session 3.5% Higher

FTSE Mib ends 3.5% higher at 13,427, with investors encouraged by ECB President Draghi’s hint of possible action next month after leaving interest rates unchanged Wednesday. “We’re witnessing a technical rebound,” says Filippo Ramigni, a fund manager at Classica SIM, adding that the market had been oversold. “The trend is still bearish. In the next 15 days, from the Greek elections to the European summit, what we see played out will set the tone for the coming months.” Intesa Sanpaolo closes +5.3%, UniCredit +4.4%, Banca Monte dei Paschi di Siena +4.3%. “The rally that began two days ago is still continuing,” says the head of trading at a Milan bank. “Volumes remain low.

Madrid Stocks Close Sharply Higher

IBEX-35 ends 2.4% higher at 6418.9, on hopes that the EU will reach an agreement allowing the ESM to inject capital directly into euro zone banks. Bank stocks gain, with Caixabank +3.4%, BBVA +3.2% and Santander +2.6%. The ECB announces no further stimulus measures, resulting in a dip in mid-afternoon trade, but stocks later recover. Builders also gain with OHL +6.2%, ACS +4.5%. Thursday, Spain tests market appetite for its debt with a bond auction in an increasingly challenging environment.

Athens Stocks Close Marginally Higher

ASE ends 0.2% higher at 477.42, rebounding slightly amid thin volume of around EUR30M after Tuesday’s 22-year closing low. Although the index closes in positive territory Wednesday, it has not benefited from the kind of hefty rebounds seen on most European bourses, with investors wary of entering this market ahead of Greece’s general election. There remains no consensus on the likely scenario after Greeks cast their votes on June 17, a trader says. He notes ECB President Draghi’s comments, made at his Wednesday press conference, on recapitalizing weak euro zone banks; but while this market is oversold, details remain vague. Still, banks push higher in Athens, with National Bank ending +2.5% and EFG Eurobank +6.9%.

Prague Stocks Close Slightly Higher

PX ends 0.8% higher at 881.2 as local stocks climb for a third straight day as more buoyant European markets are supported by the ECB keeping rates steady. Additionally, sovereign yields recede in Spain and Italy, and UK markets reopen and play catch-up after a long holiday weekend, a Prague trader says. Komercni Banka rallies to end +2.4%. Erste falls 1% after Moody’s downgrades Austria’s biggest banks. CEZ continues to rebound, ending 1.4% higher.

 

StockMarketNews Research Team

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