By Carla Mozee, MarketWatch
RBS shares drop after results; Deutsche Telekom shares rise
European stocks were searching for firm direction Friday,
failing to follow U.S. stocks higher as traders waded through a
stream of corporate updates.
Traders will likely focus on comments from U.S. Federal Reserve
speakers later, after hints of a faster pace of U.S. interest rate
rises earlier this week helped drive up bond yields.
How markets are trading
Shifting between small gains and losses, the Stoxx Europe 600
index fell 0.1% to 380.02. Only the telecom and utility groups were
moving higher. The health care and tech sectors were down the most.
On Thursday, the benchmark fell 0.2%
(http://www.marketwatch.com/story/dax-slides-1-after-fed-rate-hike-worries-slap-wall-street-lower-2018-02-22).
The U.K.'s FTSE 100 was off 0.4% to 7,252.39, and Germany's DAX
30 index slipped 0.1% to 12,453.78.
France's CAC 40 was down 0.1% at 5,304.33, and Italy's FTSE MIB
rose 0.3% to 22,534.09.
(http://www.marketwatch.com/story/european-stocks-struggle-as-hsbc-bhp-billiton-updates-disappoint-2018-02-20)The
euro bought $1.2317, up from $1.2332 late Thursday in New York.
The yield on the 10-year German bond fell 2 basis points to
0.70%, according to Tradeweb. Yields fall when prices rise.
What's driving markets
Corporate earnings were in focus at the end of the last full
week in February. The Stoxx 600 is on track early Friday for a
fractional rise, so the session should determine whether the
pan-European benchmark logs a weekly gain or decline. Last week,
the index jumped 3.3% after a run of three weekly losses.
European equities this week have largely followed moves on Wall
Street. Analysts have said the recent global rout in stocks stemmed
largely from concerns that a quickening pace of U.S. inflation
could prompt the Fed to raise interest rates more than anticipated
this year.
U.S. stock futures were rising Friday,
(http://www.marketwatch.com/story/dow-futures-surge-over-100-points-2018-02-23)
after the S&P 500 and the Dow Jones Industrial Average finished
Thursday with gains
(http://www.marketwatch.com/story/dow-futures-slide-more-than-100-points-as-fed-driven-jitters-persist-2018-02-22).
Traders will look to comments from the several Fed officials
lined up to appear Friday for more clues to the central bank's
thinking on interest rates. New York Fed President William Dudley
is among those speaking during European trading hours.
What strategists are saying
"Fears revolving around rising inflationary pressures and rate
hike jitters have certainly left investors skittish this trading
week. Investors seem to be on edge about higher interest rates and
as such, this continues to encourage global equity bulls and bears
to engage in a tough tug of war," said Lukman Otunuga, research
analyst at FXTM.
"With investors on guard as global stock markets become
increasingly sensitive to the prospect of rising inflation and
interest rates, equity bears could steal the show," he said in a
note.
Stock movers
Royal Bank of Scotland Group PLC (RBS.LN) (RBS.LN) shares
dropped 4.5% as the majority state-owned lender posted its first
full-year profit in 10 years. However, RBS said it has yet to agree
a settlement
(http://www.marketwatch.com/story/rbs-posts-first-full-year-profit-in-a-decade-as-litigation-costs-drop-2018-02-23)
with the U.S. Department of Justice over alleged mis-selling of
mortgage-backed securities.
Phoenix Group Holdings shares (PHNX.LN) jumped 5.3% after the
insurer said it bought Standard Life Assurance Ltd. from Standard
Life Aberdeen PLC in a reverse takeover for GBP2.93 billion ($4.09
billion). Shares of Standard Life Aberdeen (SLA.LN) were up
2.1%.
Deutsche Telekom AG (DTEGY) shares were up 3%. The German
telecommunications company said late Thursday it had returned to
profit in the fourth quarter of 2017
(http://www.marketwatch.com/story/deutsche-telekom-swings-to-profit-in-4q-2018-02-22-14855018),
largely boosted by the effects of U.S. tax reform.
Swiss Re (SSREY) rose 2.4% after the reinsurance heavyweight
said it's not considering issuing new capital
(http://www.marketwatch.com/story/swiss-re-profit-falls-assessing-softbank-alliance-2018-02-23).
The company did say it's "carefully assessing" the implications of
a deal with SoftBank Group Corp. (9984.TO) , and it reported a fall
in net profit in 2017.
Valeo SA (FR.FR) tumbled 9%. The French automotive supplier said
late Thursday its 2017 net profit fell year-on-year
(http://www.marketwatch.com/story/valeo-profit-falls-despite-higher-sales-2018-02-22),
despite both sales and order intake increasing.
International Consolidated Airlines Group SA shares (IAG.LN)
(IAG.LN) fell 4.3%. The British Airways parent said it was engaging
a EUR500 million share-buyback program
(http://www.marketwatch.com/story/iag-expects-better-2018-eyes-sensible-growth-2018-02-23),
and that pretax profit rose in 2017. The results were "mixed," said
Accendo Markets, with revenues in line. while adjusted per-share
earnings of EUR1.02 fell short of a EUR1.06 consensus estimate.
Economic data
Economic activity in Germany toward the end of 2017, but a
booming export sector kept Europe's largest economy on a solid
growth path, according to new data. Germany's Federal Statistical
Office said gross domestic product grew 0.6%
(http://www.marketwatch.com/story/german-gdp-eases-to-25-in-q4-but-exports-boom-2018-02-23),
or an annualized rate of 2.5%, in the fourth quarter, easing
somewhat toward the end of 2017. The report confirmed preliminary
figures.
Eurostat confirmed that eurozone inflation was at 1.3% in
January, down from 1.4% in December.
(http://www.marketwatch.com/story/euro-slips-after-ecb-minutes-show-preference-for-keeping-easing-bias-2018-02-22)
(END) Dow Jones Newswires
February 23, 2018 06:03 ET (11:03 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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