European stocks on Thursday ended at their highest since late January, as energy stocks tracked oil prices higher and Ocado shares surged after a new partnership agreement to enter the U.S. market.
How did markets move?
The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP -0.50% rose 0.7% to 395.79, its highest close since Jan. 30, according to FactSet data. The pan-European index has been grinding higher in recent days, but in volatile trade where it has swung between small gains and losses.
The U.K.’s FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX -0.30% leapt by 0.7% to a record close of 7,787.97, as traders welcomed reports that Britain plans to stay in Europe’s customs union after Brexit.
Italy’s FTSE MIB Index /zigman2/quotes/210598024/delayed IT:I945 -0.91% turned higher to close up by 0.3% at 23,801.99. Italian stocks and bonds had tumbled on Wednesday after a leaked draft of their political agenda sparked fears Italy could end up leaving the eurozone.
10-year Italian yields /zigman2/quotes/211347230/realtime BX:TMBMKIT-10Y +6.99% rose less than 1 basis points to 2.10%, according to Tradeweb. Yields rise when prices fall.
The euro /zigman2/quotes/210561242/realtime/sampled EURUSD -0.0517% fell to $1.1799 from $1.1807 late Wednesday in New York.
What drove market action?
Energy companies helped lift the European benchmarks as oil prices continued to rally following the Trump administration’s decision to leave the Iran nuclear deal. Brent hit $80 a barrel, while West Texas Intermediate crude traded closer to $72 a barrel.
The Stoxx Europe 600 Oil & Gas Index /zigman2/quotes/210599627/delayed XX:SXEP +0.32% advanced 1.5%.
Those moves helped guide the broader equity market from a muted tone toward stronger gains. Investors continued to monitor political developments in Italy and the U.K. as well as a flurry of corporate news.
In Italy, the 5 Star Movement and the League parties reportedly prepared a new draft of their coalition program, which is likely to be submitted to Italian President Sergio Mattarella later on Thursday. The new program reportedly included no references to the possibility about Italy leaving the euro, but did point to the need for a revision of EU treaties.
Meanwhile, in the U.K., the pound /zigman2/quotes/210561263/realtime/sampled GBPUSD -0.1382% rose to an intraday high of $1.3569 following a report that the U.K. government plans to tell Brussels it wants to stay in the European Union’s customs union beyond 2021 in an effort to avoid a hard border with Ireland. Such a scenario would create a so-called soft Brexit, which hard-line Brexiteers have argued against.
The report, in the Daily Telegraph , said Prime Minister Theresa May’s Brexit subcommittee has agreed on Britain staying in the customs union on a temporary basis, if the technology needed to keep the borders working after Brexit isn’t up and running.
What are strategists saying?
”The euro is coming under pressure on the back of Italian political uncertainty and the implications an anti-establishment government by the 5 Star Movement and League parties will have for the euro area. The story will be closely watched as it is expected to be the major driver in euro pairs, at least in the short term,” said Andreas Georgiou, investment analyst at XM, in a note.
Which stocks were in focus?
Shares of Ocado Group PLC /zigman2/quotes/207225647/delayed UK:OCDO -1.00% soared 44%. The company, which runs online delivery services and makes related software, said it has signed a partnership agreement with U.S. supermarket chain Kroger Co. /zigman2/quotes/206215053/composite KR -1.35% under which Kroger will use Ocado’s technology in the U.S. for grocery and other food-distribution activities.
Altice NV jumped 12% after the telecoms giant said subscribers rose in the fist quarter at the strongest “trends Altice has ever reported.”
Shares of A.P. Moeller-Maersk A/S /zigman2/quotes/202892434/delayed DK:MAERSK.B +1.00% slumped 8.9% after the Danish shipping major reported earnings below expectations.