European stocks rose ahead of Bank of England interest rate decision
European stocks traded higher in morning trade on Thursday ahead of the Bank of England’s (BoE) rate decision where investors expect the central bank to cut interest rates to a record low of 0.25 percent.
The pan-European STOXX 600 was up 0.59 percent with all major bourses in positive territory. Investors are anticipating that the BoE will cut rates for the first time since 2009 in order to prop up the British economy which has struggled since the U.K. voted to leave the European Union in June.
Some investors also expect that the BoE could resume its quantitative easing program, buying government bonds. Despite the further easing measures in the pipeline, some have questioned whether it will make a difference.
“The experience of banks in Europe and Japan should be a lesson to central bankers here in the U.K. that low and negative rates have been a disaster laying bare for all to see the soft underbelly of the problems in the European banking sector,” Michael Hewson, chief market analyst at CMC Markets, wrote in a note on Thursday.
“In fact recent easing measures by both the ECB (European Central Bank) and Bank of Japan have failed to generate the desired response from markets that policymakers had intended, which is a warning in itself that monetary policy is starting to reach its limit.”
Siemens up 3%
Earnings were also in focus for investors. German drugs and chemical maker Merck raised its sales and earnings forecast for 2016 after posting a more than 18 percent rise in net sales in the second quarter. Shares were mildly lower.
Staying in Germany, engineering firm Siemens was trading higher after it reported better than expected results for the third quarter on Thursday and raised its guidance for 2016 as a whole.
Shares of network equipment maker Nokia fell sharply after it reported earnings before interest and taxes (EBIT) of 332 million euros ($370 million) in the second quarter, missing analyst forecasts of 400 million, while sales fell 11 percent year-on-year.
In the insurance space, Aviva posted a 13 rise in first-half operating profit, helped by a boost in its life insurance unit, sending shares over 5 percent higher. Germany’s Hannover Re meanwhile posted a sharp fall in second-quarter net profit, but reaffirmed its goals for 2016, sending shares lower. And RSA Insurance Group said group operating profit was up 20 percent in the first half of the year, helping push shares higher.
In the U.K., the London Stock Exchange Group was trading flat to higher after it increased its dividend following a 9 percent rise in first-half revenue.
Easyjet was in positive territory after reporting a rise in July passengers and load factor.
Precious metals miner Randgold Resources posted a fall in production in the second-quarter, sending shares nearly 10 percent lower.
Shares of Rheinmetall were up nearly 5 percent after it reported a sharp rise in first-half sales which helped to pull up the overall auto sector.
Italian banks higher
The pan-European STOXX 600 was up 0.59 percent with all major bourses in positive territory. Investors are anticipating that the BoE will cut rates for the first time since 2009 in order to prop up the British economy which has struggled since the U.K. voted to leave the European Union in June.
Some investors also expect that the BoE could resume its quantitative easing program, buying government bonds. Despite the further easing measures in the pipeline, some have questioned whether it will make a difference.
“The experience of banks in Europe and Japan should be a lesson to central bankers here in the U.K. that low and negative rates have been a disaster laying bare for all to see the soft underbelly of the problems in the European banking sector,” Michael Hewson, chief market analyst at CMC Markets, wrote in a note on Thursday.
“In fact recent easing measures by both the ECB (European Central Bank) and Bank of Japan have failed to generate the desired response from markets that policymakers had intended, which is a warning in itself that monetary policy is starting to reach its limit.”
Siemens up 3%
Earnings were also in focus for investors. German drugs and chemical maker Merck raised its sales and earnings forecast for 2016 after posting a more than 18 percent rise in net sales in the second quarter. Shares were mildly lower.
Staying in Germany, engineering firm Siemens was trading higher after it reported better than expected results for the third quarter on Thursday and raised its guidance for 2016 as a whole.
Shares of network equipment maker Nokia fell sharply after it reported earnings before interest and taxes (EBIT) of 332 million euros ($370 million) in the second quarter, missing analyst forecasts of 400 million, while sales fell 11 percent year-on-year.
In the insurance space, Aviva posted a 13 rise in first-half operating profit, helped by a boost in its life insurance unit, sending shares over 5 percent higher. Germany’s Hannover Re meanwhile posted a sharp fall in second-quarter net profit, but reaffirmed its goals for 2016, sending shares lower. And RSA Insurance Group said group operating profit was up 20 percent in the first half of the year, helping push shares higher.
In the U.K., the London Stock Exchange Group was trading flat to higher after it increased its dividend following a 9 percent rise in first-half revenue.
Easyjet was in positive territory after reporting a rise in July passengers and load factor.
Precious metals miner Randgold Resources posted a fall in production in the second-quarter, sending shares nearly 10 percent lower.
Shares of Rheinmetall were up nearly 5 percent after it reported a sharp rise in first-half sales which helped to pull up the overall auto sector.
Italian banks higher
The banks were once again in focus for investors, with the sector higher in early trade after seeing a bounce on Wednesday. The Italian banks led the gains after the country’s Economy Minister Pier Carlo Padoan said the lenders are not in systemic crisis and do not pose a threat to the wider euro zone system. Italy also completed a regulation needed which will allow the government to help the country’s banks shift their bad loan portfolio.
Shares of Unicredit were higher a day after it reported a drop in core capital.
Ubi Banca, Banco Popolare and Deutsche Bank were among the other European banks trading higher.
Source: CNBC
