London Stocks Close Firmly Higher After EU Deal
FTSE 100 ends 1.4% higher at 5571.15, boosted by the measures agreed at the EU summit in Brussels. The mood is buoyant Friday after euro zone leaders decided to bail out Spanish banks without adding an extra debt burden for its government, although doubts linger about how long the current positive atmosphere can last, says David Jones at IG Index. Cyclical stocks lead the upside in London, with Evraz finishing 8.2% higher. Meanwhile, CRH finishes +7.3% on hopes that a new US highways bill, which would benefit the company, will be passed. Barclays ends down 1.7%, still reeling from the Libor rate fixing mess. Next week, the BOE rate announcement on Thursday will be of particular interest to investors.
Frankfurt Stocks End Session 4.3% Higher
DAX ends 4.3% higher at 6416.28. A trader says the EU summit’s decision to allow Europe’s bailout fund to prop up ailing banks directly came as a positive surprise for investors because expectations were low. News that the bailout fund won’t have a preferred creditor status with its aid for Spain is also seen as positive by strategists. Cyclical and financial stocks are particularly strong, with HeidelbergCement closing +6.6%, Commerzbank +6.2% and Allianz +5.9%. Monday, investors will eye possible details of the EU summit agreements. Scheduled data releases include German, euro-zone and US manufacturing PMIs at 0755, 0800 and 1400 GMT.
Paris Stocks Finish Session 4.8% Higher
CAC-40 ends 4.8% higher at 3196.65, amid heavy volumes, as positive results from the EU summit in Brussels overnight spark a relief rally and short-covering. Banks surge as investors react to the euro zone news. Societe Generale leads the market higher, gaining 10%, with BNP Paribas ending +9.7%. Alstom posts a gain of 7.7% after a consortium which it leads wins a EUR1B French order for commuter trains. Veolia Environnement ends 3.2% lower, the only faller on the CAC40, after a profit warning by rival Suez Environnement, which suffers a 6.9% loss. Traders say Friday’s rally could spill over into Monday’s session.
Zurich Stocks Close Firmly Higher
SMI ends 1.3% higher at 6066.86, led by financial stocks after a euro zone agreement to aid struggling banks eases fears about any further lack of progress in addressing the region’s debt crisis. Credit Suisse gets an additional boost from saying it will report a profit for 2Q and ends 4.1% higher. UBS closes 2.9% ahead, Julius Baer gains 2.6%. Next week, the euro zone will again dictate market direction; but traders in Zurich will also watch domestic economic indicators including Monday’s PMI print, plus latest SNB forex reserves data Friday.
Amsterdam Stocks End Session 3.4% Higher
Amsterdam stocks soar on the EU summit’s decision announced in Brussels overnight to allow the euro zone’s bailout fund to prop up ailing banks directly. AEX ends 3.4% higher at 307.31. All but one component stock close higher, with ING gaining 9.3%.
Nordic Stocks End Session Sharply Higher
Nordic stocks close sharply higher as investors welcome the EU summit’s proposed support measures, extending earlier gains Friday following a positive opening on Wall Street. OMXN40 ends +3.9% at 945.77, OBX +3.5% at 375.55. Banks and cyclical stocks are among the main gainers. Nordea ends +5.6%, DNB +5.9%, Vestas +8%, Outotec +7.9%. SAAB closes 6.2% higher after announcing a fighter-jet deal with Sweden’s defense agency. Monday’s focus will be on June manufacturing PMI data from China at 0230 GMT, euro zone at 0800 GMT, US at 1300 GMT.
Milan Stocks Finish Session 6.6% Higher
FTSE Mib ends 6.6% higher at 14,274, led by a late and powerful bank-driven rally. Unicredit finishes the session +14.6%, with Intesa Sanpaolo +11.6%. Outcomes from the EU summit in Brussels were the key catalyst, helping to sharply lower Italian sovereign bond yields, a Milan-based trader says. Consumer cyclicals are laggards with Luxottica +2.6%, Campari +3.2%. “Summits spawn rallies, we know that – let’s hope this one holds,” another trader says. Eyes next week will be on the fine print of the EU resolutions, with Thursday’s ECB policy meeting also in focus.
Madrid Stocks End Session 5.7% Higher
IBEX-35 ends 5.7% higher at 7102.20, in a third straight winning session, after euro zone leaders reach agreement on measures to strengthen the region’s banking system and stabilize debt markets. BBVA ends 9% higher, with Santander +6.9%, Inditex +4.3% and Telefonica +5.2% as Spain’s benchmark stock index posts its highest close since late April. “I think even the biggest optimists were surprised by the [EU] summit [outcome],” says Citigroup’s Jose Luis Martinez. “We’ll see how it all shapes up, but I think this improvement in the market can maintain itself for the short term.
Athens Stocks End Session 5.7% Higher
ASE closes 5.7% higher at 611.16, as investors welcome the EU summit agreement to drop ESM preferred creditor status in loans to Spain and open aid funds to recap banks directly, notes BBH. Banking sector gains are particularly strong, with National Bank ending +13%, EFG Eurobank +18%, Alpha Bank +15%, Piraeus Bank +14%. Still, it remains to be seen how long this positive tone continues. UniCredit says, “This summit was a step in the right direction, but it was not complete with respect to the longer-term framework. Imminent disaster has been averted, but more needs to be done.” Focus next week will be on Thursday’s ECB rate meeting, with some investors eyeing an easing of monetary conditions. US nonfarm payrolls next Friday will also be watched.
Prague Stocks Close Sharply Higher
PX ends 2.3% higher at 900.9, driven chiefly by Erste Bank jumping 5.9% on the positive overnight news from the EU summit in Brussels, with agreements by euro zone leaders giving banks based in the single-currency bloc some breathing room. Other Czech blue chips stagnate amid thin trade volumes. CEZ ends flat, Komercni down 0.1%.
StockMarketNews Research Team