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European stocks climb before EU summit, ECB rate call

April 10, 2019: Europe's major stock markets rose Wednesday before a crucial EU Brexit summit and a European Central Bank interest rate decision.

Investors were nervous about the possibility of a US-EU trade war after Washington's tariffs threat, while markets are awaiting minutes from the US Federal Reserve's latest policy meeting.

In late morning deals, London's benchmark FTSE 100 index advanced 0.2 percent as investors waited to see whether EU leaders will grant another Brexit extension.

The British pound — a key barometer of the long-running Brexit saga — held steady, shrugging off news that the UK economy grew by just 0.2 percent in February from a month earlier.

“Today is the day we have all been waiting for; the reason why markets have been so subdued at the start of the week,” said Oanda analyst Craig Erlam.

“An emergency EU Brexit summit, ECB meeting and Fed minutes will ensure this is anything but a boring day in the markets.”

In the Eurozone, Frankfurt and Paris stocks also gained ground as official data showed a 0.4-percent rise in French industrial output in February.

“Eurozone equity markets are a little higher today as traders look ahead to the ECB,” added CMC Markets analyst David Madden.

“Monetary policy is tipped to remain on hold, but policymakers might adopt more dovish language in light of the soft economic indicators released from the euro-area recently.”

Yet the ECB rate call — due at 1145 GMT — will likely be eclipsed by news from Brussels.

European leaders are gathered for a summit showdown to decide how long a Brexit delay to grant British Prime Minister Theresa May — and under what conditions.

Without a postponement, Britain is due to crash out of the European Union at midnight on Friday under a “no-deal” Brexit that could trigger economic chaos. 

May has embarked on a last-ditch battle to postpone Brexit from April 12 to June 30 to arrange an orderly departure — but European leaders are expected to offer her a longer delay of up to a year.

“All eyes are on the EU27 meeting which has the potential to force the UK to choose between no-deal or no-Brexit,” noted IG analyst Joshua Mahony.

“Meanwhile, US trade wars are back on the agenda,” he added.

European and US equities had fallen Tuesday amid a flare-up in trade tensions between Washington and Brussels.

US President Donald Trump has threatened to impose tariffs on billions in European imports in retaliation over subsidies to aviation giant Airbus.

The warning from Trump's administration that it would impose levies on more than $11 billion of European imports jolted investors.

In Wednesday trade in Paris, Airbus shares fell 0.24 percent to 118.22 euros, on the first day under new chief executive Guillaume Faury.

The stock had already dived 1.86 percent lower on Tuesday.

The development stoked concerns about the White House's hardline protectionist agenda that has taken aim at its biggest trading partners.

It also comes despite negotiators holding a series of meetings since last year ahead of proposed trade talks to resolve the dispute.

“Friend or foe, the latest headline suggests no country is exempt from the wrath of President Trump's trade agenda,” warned Stephen Innes at SPI Asset Management.

The move could dent a rally that has seen markets across the globe enjoy a blockbuster start to the year with most up at multi-month highs.

(APP)

Posted on: 2019-04-10T16:25:00+05:00

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