Europe’s pan-European index finished at its highest level in about a week on Tuesday, with analysts attributing at least some of the gains to encouraging comments from U.S. Federal Reserve Chairman Jerome Powell about the economy.
How markets are performing
The Stoxx Europe 600 index SXXP, +0.24% rose by 0.2% to end at 384.98, recovering most of Monday’s loss of 0.3%.
Among the national indexes, France’s CAC 40 index PX1, +0.24% added 0.2% to finish at 5,422.54, and Germany’s DAX 30 index DAX, +0.80% jumped 0.8% to 12,661.54. The U.K.’s FTSE 100 index UKX, +0.34% was up 0.3% to end at 7,626.33.
In currencies, the euro EURUSD, -0.4611% slipped to $1.1663 from $1.1712 late Monday in New York.
What is driving the market?
European stocks overall drifted higher alongside U.S. stocks as Fed chief Powell delivered testimony before the Senate Banking Committee. The U.S. central bank has indicated it plans to raise interest rates another two times in 2018, and investors appeared to cheer confirmation of this view from Powell.
Strategists world-wide track the central bank for the world’s largest economy, as its moves can affect a range of asset classes. While the Fed has been firmly on the rate-hike path, the European Central Bank isn’t expected to begin raising interest rates until around the third quarter of 2019.
Earlier Tuesday, European stocks had stepped, weighed largely by a slump in telecom stocks. Decliners included Telenor ASA after the Norwegian company issued financial results and its rival, Telia Co., struck a more than $2 billion acquisition deal aimed at bolstering Telia’s business in Norway.
What strategists are saying
Powell painted “a positive picture,” said Michael Hewson, chief market analyst at CMC Markets UK, in a note.
“He reiterated the belief that rates needed to continue to go higher, and that financial conditions still favour a decent level of economic growth.”
Thyssenkrupp AG TKA, +9.13% surged 9.1% following the resignation of supervisory chairman Ulrich Lehner. Lehner’s “sharply worded resignation” on Monday “makes clear that aggressive restructuring may be in the cards,” said Jefferies analyst Seth Rosenfeld in a note.
Schibsted ASA SCHA, +12.59% rallied 12.6% following second-quarter results from the Norwegian media group, which included a rise to record earnings before interest, taxes, depreciation, and amortization.
SBM Offshore NV SBMO, -16.55% sank 18% after a ratings downgrade at Bernstein of the Dutch offshore oil-and-gas services company to market-perform from outperform.
Husqvarna AB HUSQB, -17.37% sank by more than 17% following financial results from the Swedish garden tool company, which also said it is planning to restructure its underperforming consumer brands division.
Telia Co. AB TELIA, -1.84% slumped 4.1% after the Swedish telecom reached a deal to buy TDC A/S’s Norwegian business for 21 billion Norwegian krone, or roughly $2.6 billion.
Telenor ASA TEL, -3.95% fell 4% as the Norwegian telecom company’s swing to a second-quarter net profit fell short of expectations. The company did say it will continue to simplify its business and increase efficiency.