German stocks jumped by the most in six weeks Thursday, leading European equity markets higher, with shares in auto makers finding relief after the European Union’s top official struck a truce on trade issues with U.S. President Donald Trump.
The gains were made before the European Central Bank releases its latest monetary policy decision after policy makers said in June they would taper asset purchases starting in October.
Germany’s DAX 30 index DAX, +1.17% leapt 1.5% to 12,767.28, cruising toward its best session since June 14, FactSet data showed.
The surge in German stocks helped push the Stoxx Europe 600 index SXXP, +0.40% up by 0.5% to 389.08, topped by the consumer goods and tech groups. But the oil and gas, basic materials and health care sectors lost ground. The pan-European index on Wednesday dropped 0.3%.
France’s CAC 40 index PX1, +0.40% gained 0.7% to 5,463.96, and Spain’s IBEX 35 IBEX, +0.57% picked up 0.4% to 9,746.80. But the U.K.’s FTSE 100 index UKX, -0.04% fell 0.1% to 7,653.74.
Check out: European luxury stocks face a 30% drop in an all-out trade war, says UBS
The euro EURUSD, -0.1535% traded at $1.1729, unchanged from late Wednesday in New York. The shared currency was also unchanged against the pound EURGBP, -0.0562% at 0.8891 pence.
Shares of auto makers were among top price performers after European Commission President Jean-Claude Juncker and Trump said after European trading closed on Wednesday that they had agreed to work toward “zero tariffs” and “zero subsidies on non-auto industrial goods.” Trump had threatened to impose tariffs on European autos but said he’ll hold off on any retaliation as long as discussions continue.
Trump, who met with Juncker at the White House, also said the EU would buy more U.S. soybeans and that he would work on resolving tariffs on European steel and aluminum. Trump, who recently called the EU a “foe” of the U.S., tweeted a message of “love” toward the bloc on Wednesday:
Read more: Trump hails ‘big day’ for free trade as he strikes tentative pact with EU chief
And see: Text of joint U.S.-E.U. statement on trade
The “Donald Trump versus Jean-Claude Juncker face-off … went better than anyone could have expected,” said Connor Campbell, financial analyst at Spreadex, in a note. “While there isn’t exactly much substance to what was announced, with the fact the relationship didn’t worsen being more notable than the plans to negotiate, it was enough to lift the spirits of the previously fearful markets.”
European Central Bank President Mario Draghi will likely be asked about the EU-U.S. trade truce when he holds a press conference after the ECB’s monetary policy decision. The ECB isn’t expected to make waves on Thursday after saying in June said it would wind down asset purchases by the end of this year and suggested that rate hikes won’t take place until late in 2019.
The ECB’s statement is due at 12:45 London time, or 7:45 a.m. Eastern U.S. time, followed by Draghi’s press conference at 1:30 p.m. London time, or 8:30 a.m. Eastern.
The Stoxx Europe 600 Automobiles & Parts Index SXAP, +2.02% climbed 1.7%, with Fiat Chrysler Automobiles NV FCA, +4.70% rising 4.2%, Volkswagen AG VOW3, +2.71% up by 3.2% and BMW AG BMW, +2.90% gaining 2.6%. Renault SA RNO, +1.77%moved up 1.6% and Daimler AG DAI, +1.95% rose 1%.
Daimler posted a sharp drop in second-quarter profit to 1.73 billion euros ($2.02 billion), as tariffs related to the U.S.’s trade conflict with China hurt Mercedes-Benz Cars and as the company booked a big charge in Germany.
Airbus SE AIR, +4.52% surged 4.1% after the aircraft maker said second-quarter profit nearly doubled to 1.2 billion euros ($1.4 billion), but the company did trim its full-year outlook.
Cobham PLC COB, -10.41% sank 9.8% after the British aerospace-and-defense engineer said Boeing Co. BA, -0.66%is withholding payment over the KC-46 aircraft refueling tanker program. But Cobham did back its underlying profit guidance for 2018.
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