By Carla Mozee, MarketWatch
Shares of home improvement retailer Kingfisher slammed down
European stocks ended modestly lower Wednesday, as investors
prepared to hear that the Federal Reserve likely has decided to
continue raising interest rates.
How markets moved
The Stoxx Europe 600 index fell 0.2% to end at 374.96, led by
consumer services and financial shares. On Tuesday, the index rose
0.5%
(http://www.marketwatch.com/story/european-stocks-turn-lower-as-tech-stocks-weigh-on-us-futures-2018-03-20).
France's CAC 40 index gave up 0.2% to 5,239.74, and Germany's
DAX 30 sloughed off losses to edge up 1.8 points to 12,309.15.
The U.K.'s FTSE 100 index shed 0.3% at 7,038.97.
The euro bought $1.2264, up from $1.2241 late Tuesday in New
York. The pound traded at $1.4062, more than $1.3999 in the prior
session.
Read:Germany's DAX forms 'death cross' chart pattern
(http://www.marketwatch.com/story/ach-du-meine-gute-germanys-dax-forms-death-cross-chart-pattern-2018-03-21)
What was driving markets
The widely anticipated Fed policy decision for March is on deck
for global markets, and investors have priced in expectations that
it will raise its benchmark rate by a quarter-percentage point.
Investors are watching for hints the U.S. central bank may hike
rates four times this year, compared with three that have been
expected.
The Fed's monetary policy tends to drive financial markets
globally, as many companies do business in the world's largest
economy and it can lift borrowing rates for them. The decision is
due at 2 p.m. Eastern Time, or 6 p.m. London time. New Fed Chairman
Jerome Powell will hold his first post-announcement press
conference at 2:30 p.m. Eastern.
Check out:5 things to watch from the Fed decision
(http://www.marketwatch.com/story/5-things-to-watch-from-the-fed-decision-2018-03-19)
And read:It's time for stock-market investors to refocus on the
Fed
(http://www.marketwatch.com/story/now-its-time-for-the-stock-market-to-refocus-on-the-fed-2018-03-16)
The Bank of England's policy decision will follow on Thursday.
Ahead of that, U.K. data on Wednesday showed U.K. wage growth met
or exceeded forecasts
(http://www.marketwatch.com/story/uk-wage-growth-accelerates-in-january-2018-03-21)
in January. Investors were looking for a solid reading to help
prompt the Bank of England to raise interest rates in May, after
data on Tuesday showed inflation in February was lower than
expected.
Also on the radar Wednesday, European Union officials unveiled
proposals to raise taxes on revenue made by big tech companies that
operate in Europe. The European Commission, the bloc's executive
body, proposed an additional tax at 3% of revenue from some digital
activities offered by companies whose annual global revenue is more
than EUR750 million ($918 million). That would affect companies
including Facebook Inc. (FB) and Alphabet Inc.'s Google (GOOGL) .
The Stoxx 600 Technology Index edged up 0.3% during Wednesday's
trade.
See:Tech giants face hefty new EU taxes under proposal
(http://www.marketwatch.com/story/tech-giants-face-hefty-new-eu-taxes-under-proposal-2018-03-21-8485137)
What strategists are saying
"There is a small chance that we see a 50-basis-point rate hike
[by the Fed], but most analysts, me included, think this would be
an unnecessary shock for markets, despite the strong growth story
currently in the U.S.," said Axi Trader's chief market analyst
James Hughes in a note.
"In his prepared notes before his first appearance as Fed
chairman, [Jerome] Powell talked about a solid growth and robust
jobs market backdrop. This could back up the recent Fed dot chart
that shows a swing towards just 3 rate hikes this year instead of
the 4 that market is so obsessed with. All in all the focus ...
will be on which way Powell hints," said Hughes.
"Traders will now look to the Bank of England for some
much-needed clarity. Headwinds are starting to dissipate -- a
Brexit transition deal is in place, inflation from the devalued
pound is working its way out the system and wages, which can be a
stubborn beast, are proving to be resilient," wrote Fiona Cincotta,
City Index's senior market analyst.
The pound/dollar pair is trading higher, "finding resistance at
$1.4070 [and] a meaningful move above this level could see GBP/USD
target $1.41 in the near term," she added.
Stock movers
Ubisoft Entertainment SA shares (UBI.FR) rose 3.8% after French
media conglomerate Vivendi sold its stake in the video game
publisher for EUR2 billion euros
(http://www.marketwatch.com/story/vivendi-to-sell-stake-in-ubisoft-for-2-billion-2018-03-21).
Vivendi (VIV.FR) shares were also higher, by 1.3%.
Kingfisher PLC shares (KGF.LN) sank 10.7% after the home
improvement retailer behind the Screwfix and B&Q stores posted
a 10% fall in fiscal 2018 pretax profit and said there's been a
mixed performance in key markets.
(http://www.marketwatch.com/story/kingfisher-2018-profit-falls-10-2018-03-21)
The U.K. is more uncertain, France is encouraging yet volatile,
whilst the market in Poland remains supportive, said Kingfisher CEO
Véronique Laury in a statement.
Hermes International SCA (RMS.FR) tacked on 2.4% as the French
luxury retailer posted an 11% rise in profit for 2017
(http://www.marketwatch.com/story/hermes-net-profit-rises-11-for-2017-2018-03-21)
on revenue growth across all its geographical markets. The maker of
Birkin bags also confirmed its "ambitious goal" for revenue growth
at constant exchange rates.
Check out:Brexit hard-liners fling fish into River Thames in
bizarre protest
(http://www.marketwatch.com/story/brexit-hard-liners-fling-fish-into-river-thames-in-bizarre-protest-2018-03-21)
(END) Dow Jones Newswires
March 21, 2018 13:39 ET (17:39 GMT)
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