U.K. parliament backs snap election; attention swings to earnings reports
Continue Reading Below
European stocks finished with moderate gains Wednesday, as investors assessed a stack of earnings reports a day after the market suffered its worst session in five months.
The Stoxx Europe 600 rose 0.2% to end at 377.24, recovering a little from Tuesday's tumble of 1.1% (http://www.marketwatch.com/story/european-stocks-lower-as-miners-suffer-french-election-approaches-2017-04-18), the index's biggest one-day percentage drop since Nov. 2. That drop came largely on the back of a fall for U.K. blue-chips, as mining shares sold off and the pound surged above $1.28 after U.K. Prime Minister Theresa May unexpectedly called an early general election (http://www.marketwatch.com/story/heres-why-the-pound-surged-to-10-week-high-after-may-called-snap-uk-election-2017-04-18) for Britain.
May, whose Conservative Party holds a 17-seat majority in parliament, won parliamentary approval on Wednesday (http://www.marketwatch.com/story/uk-lawmakers-approve-general-election-for-june-2017-04-19) to hold a snap election on June 8. May said an election is needed to strengthen the U.K.'s position in its coming Brexit negotiations with EU officials.
"If all goes as the [U.K.] government plans, with an increased majority and a decisive mandate for those discussions, a longer window for any transitional arrangements to last until the following election (2022, in theory) is also attractive," said Ian Williams, economist and strategist at Peel Hunt, in a note.
"The market response, specifically the strong rally in sterling, seems logical," Williams added. "Despite the concerns about more uncertainty, the macro impact on the U.K. economy is unlikely to be too dramatic," he said.
Continue Reading Below
The U.K.'s FTSE 100 on Wednesday turned lower for 2017 (http://www.marketwatch.com/story/ftse-100-erases-gains-for-the-year-as-election-grips-investors-2017-04-19) after Tuesday's 2.5% slide. It closed down 0.5% at 7,114.36 on Wednesday, leaving the benchmark with a 0.4% loss for the year.
Read:Why the snap U.K. election is a 'game-changer' for the pound (http://www.marketwatch.com/story/heres-why-the-pound-surged-to-10-week-high-after-may-called-snap-uk-election-2017-04-18)
And see:What's a 'snap election' and why does Theresa May want one? (http://www.marketwatch.com/story/whats-a-snap-election-and-why-does-uk-prime-minister-theresa-may-want-one-2017-04-18)
Williams also noted measures of volatility hit new highs for the year during Tuesday's selloff in Europe, as nervousness surrounding France's presidential election. First-round voting will be held Sunday.
Read: Raucous French election could be won by dark horse François Fillon (http://www.marketwatch.com/story/raucous-french-election-could-be-won-by-dark-horse-francois-fillon-2017-04-13)
In Paris on Wednesday, the CAC 40 rose 0.3% to end at 5,003.73 after posting its worst session since September on Tuesday.
In Frankfurt, the DAX 30 was up 0.1% to finish at 12,016.45.
The euro was buying $1.0706, compared with $1.0644 late Tuesday.
Stock movers: Heineken NV (HEIA.AE) closed up 1.2% as the world's second-largest brewer by sales posted an 11% rise in net profit (http://www.marketwatch.com/story/heineken-profit-up-11-as-sales-beat-views-2017-04-19) for the first quarter and beat expectations for sales on a strong performance in Europe.
Associated British Foods PLC shares (ABF.LN) jumped 1.3%. The food ingredients producer and owner of retailer Primark raised its dividend and said its outlook for its fiscal 2017 has improved. (http://www.marketwatch.com/story/ab-foods-profit-up-36-as-primark-sales-beat-view-2017-04-19)
L'Oreal SA (OR.FR) picked up 0.7% after the French cosmetics maker reported an 8% rise in first-quarter revenue (http://www.marketwatch.com/story/loreals-sales-up-8-on-asia-north-america-2017-04-18), boosted by strong sales in Asia and North America.
Burberry Group PLC shares (BRBY.LN) dropped 7.9% after the luxury goods retailer gave a financial update. It said second-half underlying revenue was down at GBP1.61 billion (http://www.marketwatch.com/story/burberry-revenue-down-but-boosted-by-fx-gains-2017-04-19) ($20.6 billion) although it was boosted by foreign exchange gains.
Zalando SE (ZAL.XE) declined 4.8% as the German online fashion retailer Wednesday said its adjusted first-quarter earnings were around the same level as a year earlier (http://www.marketwatch.com/story/zalando-earnings-flat-even-as-revenue-rises-2017-04-19), despite revenue growth.
Economic data: The eurozone's inflation rate of 1.5% in March was confirmed at Eurostat. That's down from 2% in February.
The eurozone's trade balance with the rest of the world returned to a surplus in February (http://www.marketwatch.com/story/eurozone-trade-returns-to-surplus-as-imports-fall-2017-04-19), of EUR17.8 billion.
(END) Dow Jones Newswires
April 19, 2017 12:12 ET (16:12 GMT)