British shares outperform after BOE meeting
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European stocks ended lower on Thursday, with shares of many exporters under pressure as the euro increased in value. British blue chips, however, climbed as the Bank of England struck a dovish note even as it raised borrowing costs for the first time in a decade.
The market continued to have plenty of corporate earnings reports to consider, with Swiss lender Credit Suisse Group AG saying its profit climbed.
What markets are doing:
The Stoxx Europe 600 index fell 0.5% to end at 394.94, pulling back after the pan-European benchmark closed at a more-than two-year high on Wednesday after five straight sessions of gains.
In Frankfurt on Thursday, the DAX 30 index gave up 0.2% to end at 13,440.93 following its all-time closing high logged on Wednesday.
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The U.K.'s FTSE 100 charged up 0.9% to 7,555.32 and France's CAC 40 slipped 0.1% to 5,510.50.
What's moving markets:
Shares of exporters dropped as the euro moved higher against the U.S. dollar and other rivals following data showing manufacturing activity at an 80-month high in October. Also, Germany's jobless rate remained at a record low. A lower euro can help make products and services from European companies less expensive for overseas clients to purchase.
The euro traded at $1.1659 at the time of the European close, up from $1.1621 late Wednesday in New York. Against sterling , the shared currency bought 0.8926 pence, up from 0.8773 pence in the previous session.
The pound slump came after the Bank of England, for the first time since July 2007, raised its key interest rate (http://www.marketwatch.com/story/bank-of-england-raises-key-interest-rate-to-05-first-hike-in-10-years-2017-11-02). The 7-2 vote kicks up the rate by a quarter-percentage point to 0.5%, but the central bank flagged downside risks to the economy as the country proceeds from leaving the European Union, or Brexit. The pound plunged to $1.3064 after the decision, down from $1.3246 on Wednesday.
Read:Analysts react to historic U.K. rate rise (http://www.marketwatch.com/story/boe-delivers-a-typical-dovish-hike-analysts-react-to-historic-uk-rate-rise-2017-11-02)
What strategists are saying:
"Investors were looking at clues on when the next [rate hike] was going to be due and, post the release of the minutes and vote, the pound fell off on the back of the Bank of England's change in their language to indicate a more limited and gradual tightening cycle. That disappointed sterling hawks who were looking for a more aggressive forward guidance from them," Nish Parekh, senior trader at Silicon Valley Bank, in a telephone interview Thursday.
"The market curve...has shifted from a potential hike in June to a potential hike in Q4," or beyond. she said. "There are still a lot of unknowns and the Bank of England will have to adapt their outlook and their policies to accommodate as things unfolds around Brexit negotiations and, of course, what the effect of today's hike will be on the domestic economy."
The yield on the 10-year U.K. government bond fell 9 basis points to 1.257%, according to Tradeweb.
"There is a suspicion that this could be a 'one-and-done' move [at the BOE], especially when considering how the unsavory combination of Brexit uncertainty and weakening economic growth continues to weigh heavily on sentiment," said Lukman Otunuga, research analyst at FXTM. "Pound bears have been re-awoken thanks to the BOE, with the next level of interest at $1.3050."
Playtech PLC shares (PTEC.LN) plunged 22% as the gambling-software maker warned group performance will be below expectations for the year (http://www.marketwatch.com/story/playtech-warns-on-2017-over-asia-slowdown-2017-11-02) because of a slowdown in parts of Asia.
Credit Suisse Group AG (CSGN.EB)(CSGN.EB) gained 4.5% as the Swiss lender said third-quarter net profit jumped to 244 million francs (http://www.marketwatch.com/story/credit-suisse-net-profit-surges-beating-forecasts-2017-11-02) ($244.2 million) on strong growth in wealth management.
Randgold Resources (RRS.LN) (RRS.LN) dropped 7.2% as the miner said its pretax profit fell in the third quarter after a decline in production. Production was down 9% (http://www.marketwatch.com/story/randgold-profit-hit-by-fall-in-production-2017-11-02) to 310,618 ounces of gold compared with the second quarter.
Shares of Howden Joinery Group PLC (HWDN.LN) rallied 10%, with the kitchen products supplier saying quarterly profit climbed 8.2% on stronger volume growth. It also said it's on track to meet its full-year expectations.
German jobless claims fell by 11,000 in October (http://www.marketwatch.com/story/german-jobless-claims-drop-meeting-forecasts-2017-11-02) as the 5.6% unemployment rate remained at a record low, the Federal Employment Agency said.
IHS Markit said its final eurozone manufacturing PMI came in at 58.5 in October compared with the 58.6 flash estimate.
IHS Markit also issued its U.K. construction PMI for October. The reading of 50.8 beat the 48.0 FactSet estimate.
(END) Dow Jones Newswires
November 02, 2017 13:04 ET (17:04 GMT)