Europe close: Stocks extend rally ahead of US Fed minutes, trade talks
By Alexander Bueso
Date: Wednesday 20 Feb 2019
(Sharecast News) - Stockmarkets on the Continent pushed higher on Wednesday, seeing the day out from their session highs, after the US President signaled a more lenient stance towards China on trade and amid talk that Paris and Berlin might be set to agree on a common budget for the Eurozone.
Speaking to reporters overnight, Donald Trump said the 1 March, his self-imposed deadline to decide whether or not to hike tariffs again was not some "magical" date.
"I know that China would like not for that to happen. So I think they are trying to move fast so that doesn't happen. But we'll see what happens. I can't tell you exactly about timing [...] A lot of things can happen," Trump said.
By the end of trading, the benchmark Stoxx 600 had gained 0.67% or 2.49 points to 371.6, alongside a 0.82% or 92.76 point advance for Germany's Dax to 11,401.97 and a rise of 0.49% or 44.70 points for the Ibex 35 to 9,181.10.
Front month Brent crude oil futures on the ICE meanwhile added 0.98% to $67.13 a barrel, reversing earlier losses even after the US Department of Energy forecast that domestic shale oil output would hit a record level of 8.4m barrels a day in March.
Yet the spotlight on Wednesday was on the minutes of the US central bank's last policy meeting, which were due out after the market close, with investors keen for more details on the Federal Reserve's plans to continue, or not, reducing the size of its balance sheet.
Talking clients through the most recent events in financial markets, IG's Josh Mahony said: "US markets are treading water, as a week devoid of any notable volatility continues to drag on. The core drive of US-China trade talks remains on the cards, with talks resuming on Thursday and Friday.
"However, for now, US traders await the FOMC minutes for a new catalyst, with markets expecting a dovish tone from the Fed. While previous minutes have proven little help for traders, this occasion should garner greater interest as we seek to ascertain just how dovish the committee actually is given their recent shift in tone."
The economic calendar was rather light on Wednesday, but press reports in Germany did hold out the possibility of near-term progress on laying the foundations for a common euro area budget.
Citing German finance minister Olaf Scholz, Reuters reported that Paris and Berlin were close to agreeing on a blueprint for a common Eurozone budget which could be unveiled as soon as the current week, or failing that, then during the following one.
And just in time perhaps, for according to German weekly Die Zeit, which cited International Monetary Fund Managing Director, Christine Lagarde, the Fund might be set to cut its forecast for German economic growth again.
Lagarde reportedly also called on Berlin to boost spending on supply-side measures such as modernising the country's infrastructure.
In other news, according to Germany's Federal Office of Statistics, the rate of increase in factory gate prices in the Eurozone's largest economy slipped from a year-on-year pace of 2.7% for December to 2.6% in January (consensus: 2.2%).
Meanwhile, in Holland, the central bank-compiled index of consumer confidence retreated from a reading of 1.0 in January to -2.0 for February.
On the corporate side of things, shares of Air France-KLM climbed higher after the company committed to finding cost savings to offset dearer fuel prices.
Earlier, the carrier had posted a 20% reduction in its fourth quarter earnings before interest, taxes, depreciation and amortisation to €776.0m, even as its sales grew 4% to reach €6.54bn.
Shares of UBS were clobbered after a judge in Paris ruled that the investment bank helped French clients evade taxes between 2004 and 2012 and to then launder the proceeds, levying a €4.5bn fine on the bank.
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