Europe Markets: European stocks rebound after longest losing streak in a year

November 16
16:04 2017

European stocks were on track to break their longest losing run in a year on Thursday, with major regional indexes rebounding on the back of well-received corporate updates. Investors also cheered a rise in shares of car makers after the release of encouraging EU sales figures.

What are markets doing: The Stoxx Europe 600 index SXXP, +0.77%  rose 0.5% to 383.81, on track to break a seven-session streak of declines.

Germany’s DAX 30 index DAX, +0.72%  added 0.6% to 13,047.21, while France’s CAC 40 index PX1, +0.81%  gained 0.6% to 5,332.25. The U.K.’s FTSE 100 index UKX, +0.18% was flat at 7,372.68.  

The euro EURUSD, -0.1781%  traded at $ 1.1778, down from $ 1.1791 late Wednesday in New York.

What is driving the markets: Traders have put the recent selloff on pause as they assess the latest round of corporate updates, which are helping boost shares in the likes of Bouygues, British Land and 3i Group.

Auto maker stocks were also on the rise after data showed new car sales in the EU grew strongly in October, rebounding after a dip in September. The Stoxx Europe Automobiles & Parts Index SXAP, +1.14%  climbed 0.9%.

Meanwhile, investors are monitoring the prospects for U.S. tax reforms out of Washington, which moved into focus after the Senate Finance Committee unveiled major changes to its tax legislation earlier in the week. The first Republican senator to come out against the tax plan emerged Wednesday. That added to fears the tax reforms will suffer the same fate as the Trump administration’s health care reform legislation, which failed to get sufficient backing to move forward.

Stock movers: Bouygues SA EN, +4.80%  climbed 4.3%. The French industrial conglomerate said its nine-month net profit more than doubled, buoyed by an increased contribution from its shareholding in Alstom SA ALO, -1.47%  .

Shares of 3i Group PLC III, +1.67%  rose 2.3% after the international investment manager said it is on track to deliver another strong year of growth in its private-equity portfolio.

British Land Co. PLC BLND, +2.35%  added 2.2% after the real-estate company said it swung to a first-half profit.

Among car makers, Volkswagen AG VOW3, +2.21% VLKAY, -1.14%  rose 2.4%, Fiat Chrysler Automobiles NV FCA, +2.12% FCAU, -1.37%  climbed 1.9% and Renault SA RNO, +1.18%  gained 0.8%. In other Volkswagen news, the Germany company said it and its Chinese joint-venture partners will invest nearly $ 12 billion by 2025 in developing electric cars for the market in China.

Shares of GKN PLC GKN, -6.37%  slid 7.8% after the engineering group ousted its CEO designate Kevin Cummings amid problems at the aerospace unit he ran.

Sodexo SA SW, -1.79%  slumped 3.8% after the French food service and facilities management company offered disappointing guidance.

Economic news: U.K. retail sales dropped 0.3% in October on the year, but still beat forecasts of a 0.5% decline, according to FactSet estimates. Month-on-month sales rose 0.3%, beating the 0.1% forecast.

The pound GBPUSD, +0.1367%  turned higher after the data to buy $ 1.3181, up from $ 1.3158 ahead of the report and $ 1.3170 late Wednesday in New York.

Eurozone inflation was confirmed at 1.4% in October, down from 1.5% in September.

What are strategists saying: “The annual comparison [for U.K. retail sales] suffered due to an especially strong October last year, when growth peaked at 7.4%. However, the extent to which annual sales growth has slipped from boom to decline over the course of a year underscores the plight faced by retailers and the degree to which households are being squeezed,” said Chris Williamson, chief business economist at IHS Markit, in a note.

“On a number of levels, major indices are starting to show signs of fatigue, with both the Nikkei 225 and the German DAX in particular looking quite vulnerable to further losses, with the DAX briefly trading below its October lows yesterday before rebounding,” said Michael Hewson, chief market analyst at CMC Markets UK, in a note.

“With concerns about high yield credit prompting some profit-taking along with a recent survey that showed investors underweight in cash, it wouldn’t take much more of a push for markets to fall even further as portfolio managers start to lock in profits as we head towards year end,” Hewson added.

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