European shares close higher, but U.K. stocks fall
European shares mostly closed higher, but U.K. stocks fell as pound spiked
European markets mostly closed higher Wednesday, as the latest reports surrounding Brexit indicated a more positive outcome for the issue than many investors have been expecting.
The Stoxx Europe 600 Index SXXP, -0.34% rose 0.3% to 386.58. Thus far this week, the pan-European index is up 0.8%, a gain that has pulled it closer to break-even territory for the year. Currently, it is down 0.7% for 2018.
The index posted its third gain of the past four sessions, and it is trading at its highest level since Aug. 10. The euro EURUSD, -0.0939% was little changed against the dollar, trading at $1.1699, compared with $1.1695 late Tuesday.
Germany’s DAX, -0.62% added 0.3% to 12,561.68, while France’s CAC 40 Index PX1, -0.10% ended 0.3% higher at 5,501.33.
The FTSE 100 UKX, -0.70% sank 0.7% to end at 7,563.21. The British pound GBPUSD, -0.0461% traded at $1.3008, compared with $1.2872 late Wednesday, a move of about 1% that took it to its highest level since early August.
European shares have been generally trending higher, tracking a multiday rally in U.S. markets. Those gains—which took the S&P 500 SPX, +0.57% and the Nasdaq Composite Index COMP, +0.99% to repeated records—have in part come on optimism that trade tensions between the U.S. and its major trading partners could be easing.
In the latest economic data, growth in French consumer spending grew less than expected in July.
The U.K. is slated to leave the EU on March 29, and there have been reports which suggested the U.K. may be able to avoid the prospect of a no-deal Brexit, where the deadline passes without any agreement between the EU and British parliament on how various regulations will change in the transition.
Market analyst at CMC Markets UK, David Madden said traders took this as a sign that an agreement between the two sides has a greater likelihood of being achieved and called it a step in the right direction.
Inditex ITX, +0.04% the owner of fast-fashion chain Zara, was among the biggest decliners in the Stoxx index, falling 5.7%. Morgan Stanley cut its view on the stock to underweight from equal-weight and lowered the price target to 21 euros from 26 euros. The analysts wrote that Inditex is still a world-class retailer, but its investment proposition has been weakening for some years. And they don’t think that is properly reflected (yet) either in consensus estimates or the multiple the market is applying to them.
Petrofac Ltd. PFC, +1.23% swung to a net loss in the first half of the year due to an after-tax impairment charge. It also reported revenue that was down 11% from the year-ago period. Shares fell 1.2%.
HSBC Global Research upgraded Ferrari NV RACE, +0.78% to buy, sending shares up 4.2%.
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