European Stocks End Week at 15-Month High After Fed, Dutch Vote

European stocks advanced to the highest level since December 2015, posting a weekly advance that was supported by the Federal Reserve raising interest rates and investor relief over the result of Dutch elections.

The Stoxx Europe 600 rose than 0.2 percent at the close in London, pushing the five-day gain to 1.4 percent. Mining stocks posted their best weekly performance since November, climbing 8.4 percent.

  • “The green shoots in mining capex are starting to emerge after a four-year downturn,” Barclays analysts including Lars Brorson wrote in a note. “Miners are generating strong cash flows, deleveraging balance sheets rapidly and -- as is now clear from 2017 budgets -- stepping up capital spending again.”
  • Donald Trump and Angela Merkel are scheduled to hold a news conference in Washington after their first face-to-face meeting on Friday while U.S. Treasury Secretary Steven Mnuchin attends his first G-20 finance chiefs’ meeting in Germany.
  • JPMorgan’s European Quant Macro Index “has weakened for two consecutive months and now confirms a rotation from the ‘expansion’ toward the ‘slowdown’ phase of the cycle,” Khuram Chaudhry, a quant strategist at the bank, says in a note. “The net impact of this change is that we now prefer high-quality stocks to high-risk stocks.”
  • The Stoxx 600 index is in its fourth month trading above the 50-, 100- and 200-day moving averages.
  • Volatility is retreating across the globe after this week’s Federal Reserve policy decision and comments, while anti-immigration candidate Geert Wilders’s defeat in the Dutch elections is easing concerns about rising populism ahead of French elections. A volatility gauge on the Euro Stoxx 50 Index slid 3.1 percent further after plunging 26 percent on Thursday, the most on record.
  • Among stocks reacting to news flow, Tullow Oil Plc plunged 15 percent after announcing a rights issue to cut debt and invest.
  • Berkeley Group Holdings Plc was the top performer on the Stoxx 600 index, climbing 6 percent after forecasting full-year pretax profit at the top end of analyst estimates. Fraport AG gained 4.8 percent after its earnings outlook beat analyst estimates.
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