StockBeat: Hopes on Trade, Brexit Lift Markets; VW Hit as SEC Charges Ex-CEO

March 16
11:04 2019

By Geoffrey Smith — Europe’s stock markets look set to close the week on a positive note, opening Friday broadly higher after Chinese media reports encouraged hopes of an early end to the country’s trade war with the U.S.

The two sides had contradicted each other’s spin overnight: Chinese reports had claimed “substantial progress” in talks with the U.S., according to Reuters. But Treasury Secretary Steven Mnuchin said that a summit between the two countries’ presidents would not take place before April at the earliest, pointing to the size of remaining obstacles to a deal.

Europe seems to have chosen to give the Chinese version more weight.

At 04:00 AM ET (0900 GMT), the benchmark Euro Stoxx 600 was up 0.40 points, or 0.1% at 378.92 – a rise of over 2.1% this week. Germany’s Dax was up 0.2%, while the U.K. FTSE 100 was up 0.4%. Among the leaders are oil and gas stocks, with crude prices hovering close to 2019 highs after the International Energy Agency forecast the oil market could be in deficit in the second quarter.

The positive tone is also partly due to continued optimism that the most destructive Brexit scenarios can be avoided, even though the week’s events in London appear to have prolonged uncertainty over the final outcome.

Volkswagen (DE:VOWG_p) shares were down 0.6% after the company disclosed that the U.S. Securities and Exchange Commission had charged its former CEO Martin Winterkorn with securities fraud – the first charges to be brought against Winterkorn personally since the Dieselgate crisis exploded in 2015. The charges allege that VW knew about its problem with excessive emissions while issuing billions of dollars in bonds between 2014 and 2015.

Also in Germany, payments company Wirecard (DE:WDIG)is down 7.2% after reports suggesting that Singaporean authorities have widened their investigations into possible fraudulent accounting to the company’s Indian unit. The company said Thursday it had exonerated an employee at the heart of the investigation, although he remains suspended pending the completion of an external probe by a local law firm.

Elsewhere, Swiss banking giant UBS Group (SIX:UBSG) fell to the bottom of the local Swiss market after putting aside nearly $ 400 million in respect of the 4.5 billion euro fine it received last month in France for helping clients to avoid tax. The bank is appealing the ruling and says it would release the provision if its appeal is successful.

And finally – later Friday there will be the draw for the quarter-finals of the UEFA Champions League. That should get a reaction from the stocks of Juventus (MI:JUVE)and Ajax (AS:AJAX).

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