EUROPE MARKETS: Germany's DAX Ends Sharply Lower As Global Bond Yields Keep Climbing
By Sara Sjolin and Victor Reklaitis, MarketWatch
Euro moves back to trade at a nearly 3-year high
European stock gauges finished with sizable losses Thursday as February kicked off, falling for a fourth session in a row as global bond yields extended their recent climb.
What are markets doing?
The Stoxx Europe 600 index dropped 0.5% to end at 393.52, turning negative after a morning gain. It closed at a four-week low, cutting its 2018 gain to 1.1%.
Germany's DAX 30 index tumbled 1.4% to close at 13,003.90, also ending at a four-week low. France's CAC 40 index shed 0.5% to 5,454.55, while the U.K.'s FTSE 100 index lost 0.6% to finish at 7,490.39 (http://www.marketwatch.com/story/ftse-100-gains-kept-in-check-by-pain-for-shell-vodafone-2018-02-01), weighed down by a decline for heavyweight Royal Dutch Shell PLC after earnings.
The euro rose to $1.2486 from $1.2414 late Wednesday in New York, trading around its highest level since December 2014.
The pound also continued to move higher, buying $1.4246 compared with $1.4191 on Wednesday. Sterling ended January with a 5% gain against the dollar, its biggest monthly rise since May 2009 (http://www.marketwatch.com/story/ebullient-pound-scores-its-best-month-since-2010-but-will-the-rally-last-2018-01-31).
What is driving the markets?
Global bond yields have been climbing in recent sessions, helping to pull some money away from stocks.
On Thursday, the yield on the 10-year U.S. Treasury note rose to 2.75% for the first time since mid-2014 (http://www.marketwatch.com/story/10-year-treasury-yield-hits-275-for-first-time-in-three-years-2018-02-01). Meanwhile, the yield on the 10-year German bond, known as the bund , was recently around 0.719% as it hovered around levels last seen in 2015.
The move comes after the Federal Reserve ended its two-day meeting Wednesday on an upbeat note, saying U.S. economic growth was solid. The U.S. central bank is seen as highly likely to raise interest rates next month (http://www.marketwatch.com/story/fed-takes-step-toward-rate-hike-as-baton-set-to-pass-to-powell-2018-01-31).
What are strategists saying?
The DAX "has broken support at the 50-day moving average," said Neil Wilson, senior market analyst at ETX Capital, referring to a closely watched chart level.
"It's hard to say whether this is just a technical-based move, but it does look like nervousness in equity markets is down to rising bond yields again."
Which stocks look like key movers?
Shares of Dassault Systemes SE (DASTY) moved up 6.6% after the French software maker said fourth-quarter earnings jumped 41%.
Also in the tech arena, shares of Nokia Corp. (NOK) (NOK) rallied 12% after the Finnish telecom gear company posted earnings and revenue ahead of expectations.
NEX Group PLC (NXG.LN) surged 7.8% after reporting a 5% gain in third-quarter revenue. In its report, the financial technology firm said its markets had been "noticeably" more active in 2018 as volatility in foreign exchange markets rose from historic lows. NEX provides electronic trading platforms for banks, asset managers, hedge funds and companies.
3i Group PLC (III.LN) picked up 2.2% after the private equity and infrastructure investment company reported a 19.4% return on its assets (http://www.marketwatch.com/story/3i-total-return-at-194-in-last-9-months-of-2017-2018-02-01) for the nine months to Dec. 31.
On the downside, shares of TDC A/S (TDC.KO) were slammed 8.1% lower after the Danish telecom operator offered to buy Modern Times Group's (MTG-B.SK) broadcasting and entertainment business for $2.5 billion.
Novo Nordisk A/S (NOVO-B.KO) (NOVO-B.KO) lost 7.3% after the insulin maker issued a profit warning due to a foreign-exchange hit (http://www.marketwatch.com/story/novo-nordisk-warns-on-profit-due-to-forex-hit-2018-02-01).
Shares of Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) fell 2.5% as investors worried about the oil giant's weak cash flows (http://www.marketwatch.com/story/shell-profit-triples-but-cash-flow-disappoints-2018-02-01) in the fourth quarter. Its earnings tripled in 2017 after what the company described as "a year of transformation," which was also helped by a 18% rally in Brent oil prices .
Daimler AG (DAI.XE) lost 2.2% after the car maker posted a 49% jump in fourth-quarter profit, but also issued a cautious outlook for 2018 (http://www.marketwatch.com/story/daimler-cautious-on-2018-even-after-profit-soars-2018-02-01).
Which economic reports are out?
The eurozone manufacturing PMI was confirmed at 59.6 in January, in line with the flash reading and down from 60.6 in December. The standout was Italy, whose reading jumped to its highest level since February 2011 at 59. A level above 50 signals expansion.
In the U.K., however, the manufacturing PMI fell to 55.3 from 56.2 in December, missing analyst forecasts.
Check out:Ebullient pound scores its best month since 2009 -- but will the rally last? (http://www.marketwatch.com/story/ebullient-pound-scores-its-best-month-since-2010-but-will-the-rally-last-2018-01-31)
(END) Dow Jones Newswires
February 01, 2018 12:13 ET (17:13 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.