- Title: Mining shares rebound, pharma under pressure in weak European open
- Date: 21st November 2016
- Summary: FRANKFURT, GERMANY (NOVEMBER 21, 2016) (REUTERS) EXTERIOR OF FRANKFURT STOCK EXCHANGE STOCK EXCHANGE SIGN TRADING FLOOR TRADER / DAX CURVE IN BACKGROUND BOARD SHOWING OPENING AT 10,697.95 POINTS TRADERS BOARD SHOWING GAIN OF 42.17 POINTS OR 0.4 PERCENT TRADER TRADING FLOOR TRADER DAX CURVE VARIOUS OF HEAD OF CAPITAL MARKETS ANALYSIS AT BAADER BANK, ROBERT HALVER, IN CONVERSATION TRADER BOARD SHOWING HIGH OF 10,714.58 POINTS AT 9:05 a.m. (0805 GMT), LOW OF 10,664.17 POINTS AT 9:15 a.m. (0915 GMT) TRADERS (SOUNDBITE) (German) HEAD OF CAPITAL MARKETS ANALYSIS AT BAADER BANK, ROBERT HALVER, SAYING: "The Dax is stable, for now the Trump excitement is over. Now we are waiting to see what will happen. And the big things aren't coming until the end of the year, such as the interest rate increase from the Federal Reserve, and above all next year, the most political year of all - 2017, with lots of elections, the triggering of Brexit and the new U.S. president taking office. At the moment things are calm as we wait to see what will happen." TRADER (SOUNDBITE) (German) HEAD OF CAPITAL MARKETS ANALYSIS AT BAADER BANK, ROBERT HALVER, SAYING: "Merkel is linked to the hope that she will bring stability in an unstable Europe. But that is a mammoth task. Considering the many elections next year in the euro zone, the danger of populist election victories is very high. And even more important than Mrs. Merkel will be the role of the ECB (European Central Bank), which will have to placate voters in many countries by financing social gifts." TRADER VARIOUS OF BANK SHARES ON BOARD (SOUNDBITE) (German) HEAD OF CAPITAL MARKETS ANALYSIS AT BAADER BANK, ROBERT HALVER, SAYING: "A change of interest rates in the USA has been factored in, a rate hike is expected. If it doesn't, that will be a disappointment for the markets. Nobody will suffer if the rate increase comes. But more important is what happens in the next year. The big danger is that an interest rate increase by central banks could be cancelled out by an economic upswing in the USA. If that were to happen and the change in interest reaches the pensions market, Pandora's box will have been opened, because at the moment there is no alternative to shares. But if yields go up to three, four, five percent than there will be an alternative and the stock market will have a big problem." VARIOUS OF TRADERS DAX CURVE TRADER TRADING FLOOR
- Embargoed: 6th December 2016 09:55
- Keywords: markets stocks Frankfurt DAX
- Location: FRANKFURT, GERMANY
- City: FRANKFURT, GERMANY
- Country: Germany
- Topics: Economic Events
- Reuters ID: LVA00159DZVRH
- Aspect Ratio: 16:9
- Story Text: European shares were slightly lower in early trading on Monday (November 21) as weakness in defensives, particularly pharma and consumer staples, offset gains across the mining sector.
The pan-European STOXX 600 index fell 0.2 percent. Strength in miners helped UK's FTSE index stay in positive territory, while healthcare dragged the Swiss index SMI into the red.
Italian banks continued to be under pressure amid concerns over capital hikes at Monte Paschi and UniCredit, as well as over an upcoming constitutional reform referendum. Italy's benchmark FTSE MIB hit a six-week low.
In deals news, a U.S. regulator moved to stop a planned Chinese takeover of the German chip designer Aixtron sending its shares more than 8 percent lower.
UK mid-caps were also on the back-foot following outlook warnings from Essentra and Mitie, raising concerns over the impact of Brexit on domestic UK companies.
Germany's DAX was relatively stable, with one Frankfurt trader saying investors were holding their breath until a near-certain U.S. interest rate hike in December and a swathe of euro zone elections in 2017, including in France and Germany.
"The big things aren't coming until the end of the year, such as the interest rate increase from the Federal Reserve, and above all next year, the most political year of all - 2017, with lots of elections, the triggering of Brexit and the new U.S. president taking office. At the moment things are calm as we wait to see what will happen," head of capital markets analysis at Baader bank, Robert Halver, told Reuters.
Given that the Federal Reserve is now almost certain to raise interest rates in December, clues on future U.S. policy under Donald Trump rather than economic data will likely dominate minds and markets in the week ahead.
Investors are making plans with an implied market probability of a December rate hike in the mid-90s percent, but they are much less sure about what a Trump presidency will mean in the months and years after that.
On continental Europe, German business morale from the Ifo institute may be the big number. It is seen broadly unchanged from a two-and-a-half year high set in October.
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