Hopes for Brexit deal continue to grow, but British utility company SSE among the session’s big losers
Europe’s main stock benchmark climbed Wednesday, as analysts said the region’s bourses were following the U.S. equity market’s lead.
What are markets doing?
The Stoxx Europe 600 SXXP, +0.21% rose 0.5% to 377.12, after dipping 0.1% in Tuesday’s session.
The pan-European gauge is showing a drop of 3.1% for the year to date.
Germany’s DAX 30 DAX, +0.13% gained 0.6% to 12,041.13, while France’s CAC 40 PX1, +0.47% tacked on 0.9% to 5,328.67.
The U.K.’s FTSE 100 UKX, +0.22% edged up 0.1% to 7,277.43, hampered by the pound’s recent gains. A stronger pound can weigh on the FTSE 100, as the index’s multinational companies generate most of their sales in other currencies.
The euro EURUSD, -0.2154% dipped to $1.1586, down from $1.1607 late Tuesday in New York, while the pound GBPUSD, -0.2379% bought $1.3025, little changed from $1.3032.
The British currency has been drawing buyers this week as traders become more optimistic that a Brexit deal could be reached soon. It’s up about 0.9% against the dollar so far this week.
What is driving the market?
Europe’s rally comes after U.S. stocks closed higher Tuesday, with energy and telecom shares helping to lead the way up.
But trade worries continue to bubble below the surface as investors track the tensions between the U.S. and China, the world’s two largest economies.
On the Brexit front, the U.K. and European Union are preparing for a special summit to sign a deal in November, and the meeting could be announced within days, said a Bloomberg report citing unnamed sources. The country is due to exit the EU in March, and worries that it will crash out of the trade bloc have whacked sterling in recent weeks.
But adding to the uncertainty on Wednesday were reports that some Brexiteers may force U.K. Prime Minister Theresa May to stand down because they oppose her Brexit plan.
What are strategists saying?
“Markets in Europe, which had a mixed session yesterday, have opened modestly higher, taking their cues from a rebound in U.S. markets last night,” said Michael Hewson, chief market analyst at CMC Markets UK, in a note.
Shares in Galapagos NV GLPG, +15.72% GLPG, +15.74% soared 16% for the Stoxx Europe 600’s biggest gain after the biotech company and partner Gilead Sciences Inc. GILD, +3.14% announced that a new drug meant to help rheumatoid arthritis achieved its goals in a phase 3 study.
SSE PLC’s stock SSE, -8.04% dived 7% for the Stoxx 600’s largest drop after the utility company gave a profit warning.