UKX FTSE 100 Index

By Dave Morris

European markets reacted enthusiastically to the news that International Monetary Fund Managing Director Christine Lagarde would take over the region's central bank.

How did markets perform?

The Stoxx 600 was 0.7% higher at 392, after rising 0.4% Tuesday.

The U.K.'s FTSE 100 rose 0.7% to 7,608.8. On Tuesday it ticked up 0.8%.

The pound edged down 0.2% to $1.2570. It also declined 0.5% Tuesday.

In Germany, the DAX climbed 0.7% to 12,620.2. It closed flat on Tuesday.

France's CAC 40 increased 0.6% to 5,608.7. It edged up 0.2% Tuesday.

Italy's FTSE MIB jumped 1.2% to 21,648.7, after moving up 0.7% Tuesday.

What's moving the markets?

The European Commission broke the deadlock over several top appointments, with reports emerging Tuesday that German Defense Minister Ursula von der Leyen would be named EC President, and in something of an unexpected development, that long-serving International Monetary Fund Managing Director Christine Lagarde would head the European Central Bank (http://www.marketwatch.com/story/imfs-christine-lagarde-wins-eu-support-to-lead-european-central-bank-2019-07-02-131033418). Outgoing ECB President Mario Draghi's term ends October 31, and both the EC and ECB roles will be subject to a formal confirmation process.

Bond markets in Europe broadly rallied, which was perceived partly as an indication that Lagarde was expected to continue the ECB loose monetary policy stance in the face of slowing growth. At the individual country level, Italian bonds were buoyed by news that its coalition government had restrained its spending plans to keep it in line with European Union budget rules, while a speech by Bank of England Chairman Mark Carney signaled to investors that the bank might loosen the tightening bias of its monetary policy.

U.S. President Donald Trump put forward another two nominees to the board of the U.S. Federal Reserve (http://www.marketwatch.com/story/trump-nominates-christopher-waller-judy-shelton-for-fed-board-2019-07-02), choosing Judy Shelton and Christopher Waller. Shelton, as a staunch critic of the Fed's role in the economy, is likely to prove the more controversial of the two candidates. Trump's previous two nominees, Stephen Moore and Herman Cain, dropped out of consideration amid widespread criticism.

In economic data, Purchasing Managers' Index (PMI) surveys proved mostly underwhelming. While the Markit Eurozone PMI composite reading for June was slightly above its modest expectations at 52.2 versus 52.1 expected, both China and the U.K. missed in terms of services. China's Caixin services PMI for June was 52 (http://www.marketwatch.com/story/caixin-chinas-services-growth-slowed-in-june-2019-07-02), compared to 52.7 expected by a consensus of economists, and the U.K.'s CIPS services PMI for June was 50.2 versus a consensus reading of 51.

Which stocks are active?

Online real estate agency Purplebricks Group PLC (PURP.LN) reported a pretax loss for fiscal 2019 that was larger than the previous year. The pretax figure wes GBP56 million, versus GBP29.2 million in fiscal 2018. The company also said it had decided to exit from the U.S. market (http://www.marketwatch.com/story/purplebricks-to-exit-us-market-posts-loss-2019-07-03) after generating lower than expected revenues. Shares rose 2.8% on the news.

U.K. grocer J Sainsbury PLC (SBRY.LN) first quarter fiscal 2020 results were hit by its clothing business (http://www.marketwatch.com/story/j-sainsbury-total-retail-sales-fall-12-2019-07-03), with total retail sales retreating 1.2%. Russ Mould, investment director at AJ Bell, wrote: "This isn't an inspiring update as every single sales metric is pointing downward. But is it really a surprise? We already know the supermarket sector is highly competitive and Sainsbury's is stuck in the middle--being too expensive for value shoppers and not perceived as high enough quality for the premium shoppers." Sainsbury's shares ticked up 0.2%.

Unite Group PLC (UTG.LN) has agreed to buy Liberty Living Group PLC (http://www.marketwatch.com/story/unite-group-buys-liberty-living-for-177-billion-2019-07-03)from a Canadian pension fund for GBP1.4 billion. The deal for the student accommodation business will be a combination of cash and stock. Unite Group stock rose 2.4%.

(END) Dow Jones Newswires

July 03, 2019 06:06 ET (10:06 GMT)

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