Europe close: Stocks little changed, central banks and global trade in focus

By Alexander Bueso

Date: Monday 17 Jun 2019

Europe close: Stocks little changed, central banks and global trade in focus

(Sharecast News) - Stocks started the week on a mixed note, albeit little changed overall, with investors looking out to a spate of central bank policy decisions over the next few days, including in the US, UK and Japan.
"There does appear to be a growing belief that for all of the growing concern about a global economic slowdown, that central banks will step up to the plate and ease policy, in the coming months," said Michael Hewson at CMC Markets UK.

In the background, in remarks to CNBC, US commerce secretary Wilbur Ross said it was "very hard to put a timetable on a trade deal with China" although he believed the two countries would "eventually, probably" make a deal, but if not then the White House was "happy" to continue moving ahead with both existing and planned tariffs.

By the end of trading, the benchmark Stoxx 600 had drifted lower by 0.09% to 378.46, alongside a dip of 0.09% to 12,085.82 for the German Dax, while the FTSE Mibtel had added 0.07% to 20,626.42.

Front month Brent crude oil futures were down by 0.67% to $61.58 a barrel on the ICE, while the yield on the benchmark 10-year Italian government note was five basis points lower at 2.30%.

Ross's comments were interpreted by some observers as an attempt to keep investors from getting ahead of themselves.

On the other side of the equation, and also over the weekend, China's press appeared to keep up a steady stream of defiant commentary and articles.

An editorial in Chinese journal Qiushi stated that "China will not be afraid of any threats or pressure the United States is making" while the South China Morning Post ran an article blaming Japan's economic problems on the the US tariffs placed on its semiconductor industry in the 80s.

On the economic side of things, in an interview with the Financial Times, European Central Bank governing council member, Benoit Coeure reportedly said the euro area was not doing too badly, if one looked at strength in construction and services, signals from financial markets on the other hand, particularly from bond prices, were "quite alarming".

Elsewhere, Eurostat reported that Eurozone labour costs grew at a year-on-year clip of 2.4% over the first three months of 2019, versus a pace of 2.3% at the end of 2018.

"Overall, these are encouraging headlines [...] wage growth in the EZ should now be picking up, in response to a tighter labour market, but the pace remains uneven across countries," said Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics.

Lufthansa shares fell over 11% - their biggest single day decline in three years - after the airline lowered its profit forecast for 2019 on the back of lower sales at its low-cost Eurowings unit.

Fashion retailer Hennes&Mauritz finished down by almost 4% and near its worst levels of the session, despite posting better-than-expected sales for the three months to 31 May.

Airbus stock on the other hand continued to gain altitude after the aircraft manufacturer unveiled a launch order for 100 of its new A321XLR long-range jets for a list price of roughly $11bn at the Paris Air Show.

Deutsche Bank also finished higher against the backdrop of a falling market on the heels of reports that it was planning to overhaul its investment banking activities, including by creating a so-called bad bank that will hold tens of billions of euro in non-core assets and trimming its US equities business.


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