Europe close: Stocks buoyed by gains for Oil&Gas
By Alexander Bueso
Date: Thursday 19 Apr 2018
(WebFG News) - Stocks were slightly higher by the close of trading, boosted by fresh gains in crude oil futures which took them further past the three-year highs seen in the previous session, albeit at a price potentially, according to analysts.
Helped by chatter regarding Saudi's alleged interest in seeing oil move towards $100 a barrel, front month Brent crude oil futures added 0.39% to close at $73.76 a barrel on the ICE, which was down from an intra-day high of $74.75.
Presciently, early on Monday CMC Markets's Michael Hewson wondered aloud "You would think that investors would start to worry about the inflationary effects of the sharp rises being seen in commodity prices in recent weeks than the effects of some tariffs that haven't even been fully implemented yet."
Against that backdrop, by the close of trading, the benchmark Stoxx 600 was little changed, having gained 0.02% or 0.09 points to 381.95, but alongside a 0.19% or 23.41 point dip for the German Dax to 12,567.42, while the FTSE Mibtel gained 0.14% or 32.16 points to 23,792.04.
The Stoxx 600's gauge of Oil&Gas shares on the other hand was predictably higher, advancing by 1.13% to 330.59.
Government bonds across the globe however were lower, pushing yields sharply higher as a result, with that on the benchmark 10-year German bund climbing by seven basis points to 0.60%.
Not to be lost sight of either, overnight the spread between the yields on two and 10-year US Treasuries, also referred to by analysts as the 'yield curve', had slipped further to reach 45 basis points, against a backdrop of recent concern that the flatter curve might
be signaling an economic slowdown lay ahead.
Nevertheless, by the end of the session the yield had spread hade moved wider again.
In economic news meanwhile, it was all about international trade on Thursday, on the back of a report in the Journal that Brussels was drawing up proposals for a 'peace offer', which it hoped would end trade hostilities with the current US administration.
It would centre around a miniature version of the Transatlantic Trade and Investment Partnership, the Journal said.
Coincidentally, on Thursday the European Central Bank said that the euro area's current account surplus for February dipped from an upwardly-revised €39.0bn in January to €35.1bn for last month.
That pushed the 12-month tally to the equivalent of 3.7% of Eurozone GDP, versus 3.4% in the same month one year ago. Also worth noting however, most of that surplus was being recycled into US debt (both Treasuries and corporate), as analysts had pointed out ahead of the release.
Indeed, in February the euro area's financial account recorded a net €45bn increase in the bloc's net foreign asset position.
"This trend is consistent with the story since the inception of QE and ZIRP, in which the EZ current account surplus has been recycled into foreign assets via private portfolio flows," said Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics.
In company news, sector consolidation was a continuing theme, with Procter&Gamble disclosing on Wednesday evening that it had inked an agreement to purchase Merck KGaA's consumer business for roughly €3.4bn.
That was followed by a £42.4bn bid from Japan's Takeda for Shire.
Meanwhile, in Germany, Deutsche Bank continued to hog the headlines after ousting its chief operating officer, Kim Hammonds, and its head of investors relations announced his departure following the recent management changes.
Stock in AccorHotels meanwhile was slightly lower, despite the company having posted a 9.5% jump in revenues for the first three months of the year and management sounding a confident note on the outlook.
Further south, Italy's Banca Monte dei Paschi di Siena's chief, Marco Morelli, reportedly told La Repubblica the lender first needed to bulk up the business before entertaining thoughts of any "extraordinary operation".
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