Market commentary: European markets surge after Yellen’s speech provides comfort

European markets slumped during Thursdays session, on the back of a mix of broad worries about global growth and the unfolding impact of cheating allegations against the German auto giant Volkswagen AG that threatened to taint BMW AG.

The Stoxx Europe 600 index dropped 2.1% which is the lowest close since Jan. 9 and Germany’s DAX 30 index dropped 1.9% to end at the lowest finish since December.

Pressure on the DAX came in part from BMW AG. BMW shares plunged nearly 10% at one point during the session after Auto Bild magazine reported the emissions on a street test of one of the company’s car models was much higher than allowed in Europe. BMW shares closed 5.2% lower, In the meantime the report was denied.

Volkswagen closed higher recovering some of this week’s losses. The company is set to appoint Porsche chief Matthias Mueller as its new CEO and announce the departure of top executives in a sweeping overhaul to begin repairing the carmaker’s image tarnished by rigged emissions tests.

In London, U.K. stocks surged this morning, finding support as U.S. Federal Reserve Chairwoman Janet Yellen suggested an interest-rate increase for the world’s largest economy remains on the table this year.

Commodity-related shares, which have been battered by worsening growth prospects, gained on Friday. Glencore PLC rose 5.3%, but was still on track for a weekly decline of 18%. Copper producer Antofagasta PLC bounced up 3.3% and BHP Billiton PLC  tacked on 2.2% all paring some of this week’s losses

The FTSE 100 gained 1.4% in early trading with other European indices also positive.

Equity markets worldwide have slumped since the Fed last week flagged concerns about global economic conditions as reason to hold off on raising its benchmark interest rate for the first time in nearly a decade. But Yellen, in a speech in Massachusetts late Thursday, said growth internationally isn’t weak enough to have a long-term impact on U.S. monetary policy.

On Wall Street, Shares of Nike Inc. rallied in Thursday's extended trade after the athletic gear maker reported a strong increase in quarterly earnings. Nike reported its fiscal first-quarter earnings rose to $1.18 billion. Revenue grew 5% to $8.41 billion. Shares climbed 5.5% in after-hours trade.

Commodity-related shares, which have been battered by worsening growth prospects, gained Friday. Glencore PLC rose 5.3%, but was still on track for a weekly decline of 18%. Copper producer Antofagasta PLC bounced up 3.3% and BHP Billiton PLC tacked on 2.2% all paring some of this week’s losses.

This article was issued by Andrew Cassar Torregiani, Trader/ Analyst at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri & Co. Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.