European stocks ended the session little changed in negative territory on Tuesday, after struggling for direction for much of the session amid trade optimism that lifted the euro to its strongest level against the dollar since July.
The currency move provided some resistance for multinational companies in the region.
How are the major benchmarks trading?
The Stoxx Europe 600 Index /zigman2/quotes/210599654/delayed XX:SXXP +0.09% closed at 385.46, little changed but in the red, after closing up 0.5% on Monday. U.S. stocks on Tuesday attempted to extend gains after, the S&P 500 index /zigman2/quotes/210599714/realtime SPX -0.16% and Nasdaq Composite indexes /zigman2/quotes/210598365/realtime COMP +0.48% closed at records for a second straight day on Monday, driven by enthusiasm over progress toward a U.S.-Canada trade pact.
In step with gains for resource companies Tuesday, KAZ Minerals PLC /zigman2/quotes/208098927/delayed UK:KAZ +0.25% shares were the biggest gainer on the Stoxx Europe 600, up 8.4%.
Standing out, the FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -0.28% climbed 0.5% to 7,617.22, returning to action after a three-day weekend. Metal and mining plays were among the biggest gainers, including BHP Billiton PLC , up 2.8% and commodities giant Glencore PLC /zigman2/quotes/201400686/delayed UK:GLEN -0.21% , up 2.1%.
Elsewhere, Germany’s DAX /zigman2/quotes/210597999/delayed DX:DAX +0.28% ended down 0.1% at 12,527.42, while the CAC 40 Index /zigman2/quotes/210597958/delayed FR:PX1 +0.53% closed up 0.1% at 5,484.99.
Italy’s FTSEMIB Italy Index /zigman2/quotes/210598024/delayed IT:I945 +0.42% ended the day off 0.9% at 20,620.05, led by a 0.7% drop for heavyweights electricity and gas group Enel SpA /zigman2/quotes/207756670/delayed IT:ENEL +0.02% and banking group Intesa Sanpaolo /zigman2/quotes/206161760/delayed IT:ISP +0.88% , off 1.1%.
Spain’s Ibex 35 Index /zigman2/quotes/210597995/delayed XX:IBEX +0.34% finished the session 0.6% lower at 9,606.50.
The euro /zigman2/quotes/210561242/realtime/sampled EURUSD +0.0839% firmed up against the dollar, trading at $1.1719, compared with $1.1678 late Monday. The euros current level represents the strongest level against the dollar since around July.
What moved the market?
The euro’s strength that weighed on European multinationals came on the back of a weaker U.S. dollar, which in turn had fallen as investors breathed some relief over global trade wars.
President Donald Trump on Monday said his administration reached a deal with Mexico on issues that have held up renegotiation of the North American Free Trade Agreement for over a year. Trump said he would see if Canada could join the bilateral deal, and that talks with its northern neighbor would resume soon and could lead to a separate deal.
Meanwhile, Trump spoke by telephone to German Chancellor Angela Merkel on Monday, with the two strongly supporting “ongoing discussions between Washington and Brussels to remove barriers to a deeper trading relationship,” the White House said in a statement, according to Reuters .
Budget uncertainty, which has been a lingering drag on Italian stocks, got a reboot Tuesday after deputy prime minister, Luigi Di Maio, told Italian newspaper Il Fatto Quotidianon that he did not “exclude” a breach of the European Union’s rules that say public deficits must not exceed 3% of gross domestic product. But he also said the government was still working on the budget.
What did analysts say?
“In the short run, the market is a momentum machine, and this is being clearly demonstrated as the U.S. market diverges from Europe, leaving the FTSE and others trailing far behind,” said Chris Beauchamp, chief market analyst at IG, in a note to clients, who noted the strength in the euro.
“But with U.S. GDP tomorrow and non-farms coming up next week this near-term weakness in the greenback may soon reverse—and while this will help the FTSE on the sterling front, a higher dollar will hit commodity prices, limiting potential upside for the index, suggesting those looking for gains will keep their money stateside,” said Beauchamp.