By Dave Morris
European markets are on the cusp of logging a third consecutive day of gains as investors looked to Brexit and U.S.-China talks for encouragement.
How did markets perform?
The Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP +0.83% was flat at 383.5 Tuesday after a more upbeat opening, as regional indexes began to flirt with flat-to-negative territory. It closed Monday up 1.2%.
The euro /zigman2/quotes/210561242/realtime/sampled EURUSD +0.0370% has been largely rangebound. It was down 0.1% Tuesday to $1.1198, after closing Monday up nearly 0.1%.
The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.0077% was down after the latest Brexit vote results, sinking 0.4% to $1.3041 after gaining 0.9% Monday.
The U.K.’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +1.02% led the regional gainers, up 0.5% to 7,352.5 following Monday’s rise of 0.5%.
Both the German and French benchmarks were flat Tuesday. France’s CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +0.90% was at 5,407.7 after rising a full percentage point Monday, and Germany’s /zigman2/quotes/210223310/composite DAX +0.64% at 11,679.8 Tuesday after rallying 1.4% Monday.
Italy’s FTSE MIB /zigman2/quotes/210598024/delayed IT:I945 +1.01% index sank 0.2% to 21,477.2, following Monday’s gain of 1.1%.
What’s moving the markets?
If it were possible for Brexit to seem even more chaotic than before, the second set of meaningful votes Monday night achieved a unique degree of confusion. Even after narrowing the options following the first meaningful votes last week, there was still no majority in the U.K.’s Parliament for any of the options on offer, which included membership in a customs union and a referendum on any deal. Prime Minister Theresa May will hold a lengthy cabinet meeting Tuesday with a view to putting her deal up for a fourth vote, which still seems unlikely to pass. One thing was definitively decided: Conservative M.P. Nick Boles, a former minister whose attempts to foster compromise won him fans on both sides of the aisle, quit the party in frustration.
Oil has been on a bit of a tear, with key benchmarks hitting new year-to-date highs of $69.13/bbl for Brent. and $61.68/bbl for West Texas Intermediate (WTI). The commodity has been defying global growth fears thanks to Monday’s positive manufacturing purchasing managers index (PMI) survey figures in China. Reuters also reported that supply by members of the Organization of the Petroleum Exporting Countries (OPEC) hit a four-year low in March, thanks to Venezuelan output declines and Saudi Arabia supply reductions that exceeded their stated target.
Jasper Lawler, head of research at London Capital Group, said “Investors were also cheering the prospect of further output cuts following encouraging remarks from Iran. Crude stockpiles will now be in focus, to assess the potential threat on oil prices.”
U.S.-China trade talks optimism continued to spread through markets, though there were no notable developments Tuesday as investors waited for Chinese Vice Premier Liu He to arrive in Washington, D.C. for negotiations.
Which stocks are active?
The acting President and CEO of scandal-hit Swedish bank Swedbank A/S /zigman2/quotes/203208387/delayed SE:SWED.A +2.45% shuffled the lender’s executive committee Tuesday, prompting a rise in the share price of 3.8%. Anders Karlsson took over from Birgitte Bonnesen on March 28 when she was fired as allegations of €135 billion of money-laundering engulfed the bank. Despite the rise, the shares remain down nearly 34% year-to-date.
Danish trucking company DSV A/S /zigman2/quotes/201394483/delayed DK:DSV +2.38% rose another 2.2% following its merger announcement Monday with Swiss logistics company Panalpina Welttransport Holding AG in a $4.6 billion deal. In a note on Monday, Credit Suisse analysts raised their price target for Panalpina to reflect DSV’s offer, but added: “We expect the global airfreight market to be down 2-3% [year over year] in 1Q, and with air representing 91% of Panalpina’s 2018A [earnings before interest and taxes], this suggests vulnerability.”
U.K. auto maker and industrial firm Rolls-Royce PLC /zigman2/quotes/203646520/delayed UK:RR -1.90% took a hit to the tune of 1.8% on a report in the Financial Times that Singapore Airlines had grounded two of its fleet’s Boeing 787 Dreamliners on issues with the turbine blades in their Rolls-Royce engines. The airline said it had observed blades deteriorating prematurely; a Rolls-Royce spokesperson told the FT they had long advised operators that the blades had a “limited life cycle”.