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Basic Materials
Large Cap
Market Cap £25.65bn
Enterprise Value £31.23bn
Revenue £38.68bn
Position in Universe 11th / 725

Strongest week since May for European shares as Fed tone spurs relief

Fri 14th July, 2017 5:02pm
* STOXX 600 up 0.1 pct * Steelmakers boost basic resources * Construction stocks drop, banks wilt * Nordic stocks in focus as Gjensidige, Skanska fall * SEB leads banks after Q2 beat (ADVISORY- Follow European and UK stock markets in real time on the Reuters Live Markets blog on Eikon - see cpurl://apps.cp./cms/?pageId=livemarkets) By Kit Rees and Helen Reid LONDON, July 14 (Reuters) - European shares had their strongest week in more than two months as investors piled back into equities on signs that the world's major central banks would likely not tighten monetary policy as quickly as some had feared. The move on indexes on Friday was more muted as investors digested disappointing earnings reports from major U.S. banks including JPMorgan JPM.N and Citigroup C.N , which sent banking stocks .SX7P lower. The pan-European STOXX 600 .STOXX index inched up 0.1 percent while euro zone bluechips .STOXX50E fell 0.2 percent. "In Europe, we're still not dealing with any higher interest rates, which should be benefiting the U.S. (banks) slightly in terms of net interest margin," Mike van Dulken, head of research at Accendo Markets, said. "That said we've still got the supportive QE helping, but yields are still low, which is not great for the banks." Flows data showed investors rushed back into equities this week as the Fed's tone rekindled their enthusiasm for riskier assets.*:nL8N1K51YV Firmer metals prices underpinned gains on mining stocks on Friday. Miners .SXPP were led to a three-month high by steel firms Outokumpu OUT1V.HE , ArcelorMittal MT.AS , and Tenaris TENR.MI which rose after U.S. President Donald Trump said that he was considering quotas and tariffs on Chinese steel dumping.*:nL1N1K41LP Analysts at Barclays said they remained positive on the European mining sector, which has gained just 4 percent so far this year after rallying more than 60 percent in 2016. "Chinese rates are falling, demand indicators across the economy appear healthy, industry capex discipline is holding, M&A is generally off the agenda, and resulting strong cashflows are being utilised for balance sheet reconstruction and distributions to shareholders," Barclays analysts said in a note. While a rise in bond yields has hit rate-sensitive sectors such as utilities .SX6P , banking stocks .SX7P have benefited. On Friday, however, the sector was under pressure as earnings from major U.S. banks disappointed, and CPI data indicated inflation in the U.S. was slowing, potentially putting a dampener on the Fed's monetary policy tightening plans. Banks gain when interest rates rise, widening their margins. Euro zone banks .SX7E fell 0.7 percent, leaving them unchanged on the week after a strong performance last week. Swedish lender SEB SEBa.ST jumped 1.3 percent after its second-quarter profit topped forecasts.*:nL8N1K50J2 Other Nordic stocks were also in focus as Norwegian insurer Gjensidige GJFS.OL slumped 6.5 percent to the bottom of the STOXX 600 after its second quarter results came in below forecasts.*:nFWN1K40QG It was joined by Swedish construction group Skanksa SKAb.ST , which dropped nearly 5 percent after it warned that its second-quarter profit would be hit by project writedowns in the U.S. and Britain.*:nL8N1K519B European earnings get underway in earnest later this month. Overall, analysts are calling for about 9 percent year-on-year earnings growth for top European firms, compared to about 8 percent for the U.S., according to Thomson Reuters I/B/E/S. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Global earnings growth ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Kit Rees, Editing by Vikram Subhedar/Toby Chopra/Ken Ferris) ((; +44 207 542 2784;)) Keywords: EUROPE STOCKS/
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