By Carla Mozee and Victor Reklaitis, MarketWatch
Bank of England decision boosts odds for May rate hike
European stocks finished at their lowest level in three weeks
Thursday, hit hard by worries about a global trade war as the U.S.
took steps toward slapping tariffs on China, a move that could hurt
economic growth worldwide just as business activity in the eurozone
is showing signs of slowing.
The Bank of England kept its interest-rate policy on hold as
expected, and did little to dispel expectations that it could
tighten policy at its May meeting.
How markets are moving
The Stoxx Europe 600 index fell 1.6% to end at 369.15, notching
its lowest close since March 2, according to FactSet data.
In Frankfurt, the DAX 30 stumbled 1.7% to close at 12,100.08 and
in Paris, the CAC 40 index gave up 1.4% to finish at 5,167.21. The
U.K.'s FTSE 100 index dropped 1.2% to end at 6,952.59.
The euro fell to $1.2299 from $1.2338 late Wednesday in New
York, giving up an intraday high of $1.2389.
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's driving markets
A selloff in European equities worsened as U.S. stocks were
mauled
(http://www.marketwatch.com/story/dow-poised-to-drop-by-more-than-100-points-2018-03-22),
moves that sent the Dow Jones Industrial Average down by more than
500 points intraday. Stocks suffered ahead of an expected
announcement that the Trump administration will put trade
restraints against China, the world's second-largest economy.
After the close for European Markets, President Donald Trump
said he has instructed the office of the U.S. Trade Representative
to draw up a list of tariffs on Chinese products totaling up to $60
billion
(http://www.marketwatch.com/story/trumps-china-tariffs-a-fight-for-control-over-robots-wireless-other-future-technologies-2018-03-22).
Read:Trump, Xi set to undergo rockier phase as trade fight heats
up
(http://www.marketwatch.com/story/trump-xi-set-to-undergo-rockier-phase-as-trade-fight-heats-up-2018-03-22)
The measures could be intensifying a long-running dispute in
which the U.S. has accused China of engaging in unfair trade
practices. European stocks had already been lower during the
session after data firm IHS Markit's closely watched readings on
business activity in the eurozone fell short of expectations.
Separately, a report showed German business sentiment slightly
dampened in March. Think-tank Ifo said its survey indicated the
threat of protectionism in global trade is darkening sentiment in
Europe's largest economy.
Check out:China talks tough on trade, vows action against U.S.
tariffs
(http://www.marketwatch.com/story/china-talks-tough-on-trade-vows-action-against-us-tariffs-2018-03-22)
In the U.K., the pound initially rallied after the BOE kept its
key interest rate at 0.5%, but with a 7-2 split of votes on the
Monetary Policy Committee. That, along with signs that wages are
firming, suggest that the bank is getting ready to hike rates in
May.
What strategists are saying
-- "Investors continue to display an anxiety about the path of
interest rates against a backdrop of escalating trade conflicts,"
said Craig Erlam, Oanda's senior market analyst, in a note.
"On top of that, Donald Trump seems intent on starting trade
wars, most notably with China, which could trigger a wave of
protectionism and drive up prices in the U.S. and likely weigh on
the growth momentum. How the central bank deals with this will be
very interesting, given the already fast pace of hikes," Erlam
said.
-- "The message from the Bank of England to borrowers couldn't
really be clearer: Get ready for higher rates now. Two members
voted for a rate rise this month, and the Bank said nothing to
dispel expectations that rates will rise in May," said Ed Monk,
associate director for personal investing at Fidelity
International, in a note.
"The MPC breaks up now for a month and returns in May, with the
signs pointing to a rate rise. Despite that, the upward trajectory
of interest rates is still expected to be gradual," he added.
Economic data
IHS Markit said its flash eurozone composite purchasing
managers' index -- which covers both manufacturing and services --
was at 55.3, a 14-month low. That was below the 56.8 consensus
estimate from a FactSet survey of analysts.
The eurozone's current-account surplus -- which measures the
flow of goods, services and investments -- rose in January to
EUR37.6 billion
(http://www.marketwatch.com/story/eurozone-current-account-surplus-rises-in-january-2018-03-22),
the highest level in four months, according to European Central
Bank data.
U.K. retail sales grew by 0.8%
(http://www.marketwatch.com/story/uk-retail-sales-rebound-in-february-2018-03-22)
on month in February, twice the pace seen in a Wall Street Journal
survey of analysts.
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)
Stock movers
Reckitt Benckiser Group PLC shares (RB.LN) surged 4.8% after the
consumer goods company said it's ending talks about its potential
purchase of Pfizer Inc.'s
(http://www.marketwatch.com/story/reckitt-benckiser-ends-talks-to-buy-pfizer-unit-2018-03-22-44851030)(PFE)
consumer health-care business. Reckitt Benckiser said it was
looking to buy just part of the business, but that goal couldn't be
met.
Ted Baker PLC (TED.LN) slid 13% after the luxury fashion
retailer warned that trading conditions will remain challenging
(http://www.marketwatch.com/story/ted-baker-2018-profit-up-but-warns-on-challenges-2018-03-22)
in the markets in which it operates.
IG Group Holdings PLC (IGG.LN) climbed 2.9%, with the online
trading platform posting a 30% rise in third-quarter revenue to
GBP152.9 million pounds ($215.0 million), bolstered by increased
client numbers and cryptocurrency trading
(http://www.marketwatch.com/story/ig-revenue-hits-record-boosted-by-crypto-trading-2018-03-22).
United Internet AG (UTDI.XE) dropped 9.5% following a
disappointing 2017 earnings report.
Halma PLC (HLMA.LN) fell 2% as the safety, health and
environmental technology company said its first-half
foreign-exchange benefits reversed in the second half. It also
forecast adjusted pretax profit for fiscal 2018 to be in line with
market expectations
(http://www.marketwatch.com/story/halma-sees-2018-profit-in-line-with-forecasts-2018-03-22).
(END) Dow Jones Newswires
March 22, 2018 13:41 ET (17:41 GMT)
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