EUROPE MARKETS: European Stocks Slammed By Oil Plunge, Wall Street Weakness
By Carla Mozee, MarketWatch
SoftBank sees Swiss Re stake; Bank of England decision on deck
European stocks dropped on Thursday, taking their cues from a selloff on Wall Street as well as a plunge in oil prices that weighed on shares of the region's major energy companies.
What are indexes doing?
The Stoxx Europe 600 index fell 1.6% to close at 374.03, partly erasing a 2% rally from Wednesday (http://www.marketwatch.com/story/european-stocks-snap-7-day-selling-spree-after-wall-street-rebound-2018-02-07), when the benchmark broke a string of seven straight declines. The pan-European index is now on track for a 3.6% weekly slump, which would be its worst since February 2016.
Germany's DAX 30 index slumped 2.6% to 12,260.29, and France's CAC 40 index fell 2% to 5,151.68. The U.K.'s FTSE 100 ended down 1.5% to 7,170.69 (http://www.marketwatch.com/story/uk-stocks-return-to-red-with-boes-super-thursday-ahead-2018-02-08).
The euro fell to $1.2243, down from $1.2265 late Wednesday in New York.
What's driving the market?
European stocks had opened in negative territory, but losses deepened in the afternoon when Wall Street opened with steep losses as volatility returned to grip the market (http://www.marketwatch.com/story/dow-poised-to-edge-up-as-traders-lick-their-wounds-after-a-punishing-stretch-2018-02-08). Concerns over rising inflation and rising bond yields have weighed on traders' minds this week and pushed the Dow average to its biggest over point drop on Monday.
The euro remained lower Thursday (http://www.marketwatch.com/story/dollar-rides-to-2-week-high-on-wave-of-us-budget-deal-optimism-2018-02-08) as the dollar rose, continuing its push higher from Wednesday when the congressional leaders in the U.S. struck a two-year budget deal (Here%e2%80%99s%20what%e2%80%99s%20in%20the%20budget%20deal%20struck%20by%20congressional%20leaders) that would raise fiscal spending and avoid a government shutdown.
A lower euro can help shares of European exporters, as it makes their products less expensive for overseas clients to buy, but softness in the shared currency wasn't bolstering stocks on Thursday.
In the U.K., the pound rallied and weighed on stocks after the Bank of England struck a surprisingly hawkish tone and hinted interest rates could rise as early as May. Sterling jumped to an intraday high of $1.4066 from $1.3882 late Wednesday in New York.
Read:A U.K. rate rise in May? Analysts digest hawkish surprise from BOE (http://www.marketwatch.com/story/a-uk-rate-rise-in-may-analysts-digest-hawkish-surprise-from-boe-2018-02-08)
German Bundesbank President Jens Weidmann said Thursday (http://www.marketwatch.com/story/weidmann-ecb-should-wind-down-qe-after-september-2018-02-08) the ECB should wind down its massive bond-buying program after September despite a trend in euro strength and volatility on global financial markets.
What are strategists saying?
"Investors across the globe are finding it [a] difficult time currently to decide on whether to buy the recent dips, or to remain on the sidelines until the dust settles," said Hussein Sayed, chief market strategist at FXTM, in a note. "Speculators may be having some fun trading such a volatile market, but this isn't true for longer-term investors."
"Stocks are offside today as traders undo the positive move from yesterday. Investors remain unconvinced that panic has disappeared from the markets. The aftermath of a major decline usually leaves traders in limbo as the fear another leg lower is around the corner, and stocks are selling off as we approach the close," said David Madden, market analyst at CMC Markets UK, in a note.
Oil companies slid as crude oil prices fell 1.6% to $60.79 a barrel (http://www.marketwatch.com/story/oil-drops-to-6-week-low-on-rising-us-production-inventories-2018-02-08). Shares of BP PLC (BP.LN) dropped 0.8%, Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) lost 2.1% and oil producer Lundin Petroleum AB (LUPE.SK) moved down 2.4%.
Resource shares got hit too. Iron ore producer BHP Billiton PLC (BLT.LN) (BHP.AU) (BHP.AU) slid 2.5% and gold miner Randgold Resources Ltd. (RRS.LN) gave up 2.4%.
TDC A/S shares (TDC.KO) soared 18% after the Danish telecommunications company said late Wednesday it has rejected a joint takeover bid (http://www.marketwatch.com/story/danish-telecom-tdc-as-rejects-takeover-bid-2018-02-08) from Australia's Macquarie (MQG.AU) and Danish pension funds PFA, PKA and ATP. Financial details of the bid weren't disclosed.
Swiss Re AG (SSREY) jumped 2.1%, with Japanese conglomerate SoftBank Group Corp. (9984.TO) in talks to buy a stake in the Swiss reinsurance heavyweight (http://www.marketwatch.com/story/softbank-in-talks-to-buy-up-to-a-third-of-swiss-re-2018-02-08).
Société Générale SA (GLE.FR) rose 2% after the French lender's fourth-quarter net profit fell significantly, hit by one-off items, but the profit of 69 million euros ($85.1 million) (http://www.marketwatch.com/story/societe-generale-profit-falls-but-beats-forecasts-2018-02-08) was above analyst expectations.
(END) Dow Jones Newswires
February 08, 2018 12:26 ET (17:26 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.