2-1-18 5:42 AM EST | Email Article

By Sara Sjolin, MarketWatch

Euro moves back to trade around 3-year high

European stocks kicked off February in an upbeat fashion, rising for the first time in four days after a bout of well-received earnings, particularly from the financial and technology sectors.

What are markets doing?

The Stoxx Europe 600 index rose 0.5% to 397.53, rebounding from an almost four-week closing low reached on Wednesday (http://www.marketwatch.com/story/european-stocks-inch-higher-but-gains-kept-in-check-by-43-capita-plunge-2018-01-31).

Germany's DAX 30 index put on 0.4% to 13,239.70, while France's CAC 40 index added 0.6% to 5,514.91. The U.K.'s FTSE 100 index gained 0.1% to 7,543.15 (http://www.marketwatch.com/story/ftse-100-gains-kept-in-check-by-pain-for-shell-vodafone-2018-02-01), held back by a loss from heavyweight Royal Dutch Shell PLC after earnings.

The euro rose to $1.2445 from $1.2414 late Wednesday in New York, trading around its highest level since December 2014.

The pound also continued higher, buying $1.4270 compared with $1.4191 on Wednesday. Sterling ended January with a 5% gain against the dollar, its biggest since May 2009 (http://www.marketwatch.com/story/ebullient-pound-scores-its-best-month-since-2010-but-will-the-rally-last-2018-01-31).

What is driving the markets?

European stocks picked up the lead from a positive session in the U.S. on Wednesday (http://www.marketwatch.com/story/dow-set-to-stabilize-after-shedding-540-points-in-2-days-2018-01-31) when the Federal Reserve struck an upbeat tone and said U.S. economic growth was solid.

A round of strong corporate updates also helped stocks move higher on Thursday in Europe, with banks and tech stocks posting some of the biggest gains. The Stoxx 600 banks index and Stoxx 600 tech index both added 1.2%, boosted respectively by earnings from software maker Dassault Systemes SE (DASTY) and financial technology firm NEX Group PLC (NXG.LN) .

Banks were also supported by hawkish signals from the Fed, which is now seen highly likely to raise interest rates in March (http://www.marketwatch.com/story/fed-takes-step-toward-rate-hike-as-baton-set-to-pass-to-powell-2018-01-31). Higher interest rates tend to be good for banks because they can charge more for the loans.

What are stocks doing?

Shares of Dassault Systemes jumped 7.6% after the French 3D software producer said fourth-quarter earnings jumped 41%.

Also in the tech arena, shares of Nokia Corp. (NOK) (NOK) rallied 6.7% after the consumer electronics company posted earnings and revenue ahead of expectations.

Among financial services companies, NEX Group surged 8% after reporting a 5% gain in third-quarter revenue and saying its markets had been "noticeably" more active in 2018 as volatility in foreign exchange markets rose from historic lows. NEX provides electronic trading platforms for banks, asset managers, hedge funds and companies.

In the same sector, 3i Group PLC (III.LN) picked up 3.4% after the private equity and infrastructure investment company reported a 19.4% return on its assets for the nine months to December 31.

On the downside, shares of TDC A/S (TDC.KO) were slammed 11% lower after the Danish telecoms operator offered to buy Modern Times Group's (MTG-B.SK) broadcasting and entertainment business for $2.5 billion.

Novo Nordisk A/S (NOVO-B.KO) (NOVO-B.KO) lost 5.2% after the insulin maker issued a profit warning due to a foreign-exchange hit (http://www.marketwatch.com/story/novo-nordisk-warns-on-profit-due-to-forex-hit-2018-02-01).

(DASTY)Shares of Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) fell 2% as investors worried about the company's weak cash flows in the fourth quarter. The oil giant said earnings tripled in 2017 (http://www.marketwatch.com/story/shell-profit-triples-on-higher-oil-prices-2018-02-01) after "a year of transformation," which was also helped by a 18% rally in Brent oil prices .

Daimler AG (DAI.XE) lost 1.2% after the car maker posted a 49% jump in fourth-quarter profit, but also issued a cautious outlook for 2018.

What's new in economics?

The eurozone manufacturing PMI was confirmed at 59.6 in January, in line with the flash reading and down from 60.6 in December. Among stand out countries, Italy's reading jumped to its highest level since February 2011 at 59. A level above 50 signals expansion.

In the U.K., however, the manufacturing PMI fell to 55.3 from 56.2 in December, missing analyst forecasts.


(END) Dow Jones Newswires

February 01, 2018 05:42 ET (10:42 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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