Market commentary: Euro falls on speculation of more QE, while Fed signals rate hike

European stocks got a helping hand as Fed signalled their hawkish position on a rate hike as the U.S economy looks healthy enough to withstand a hike in borrowing rates.  The Stoxx Europe 600 finished up half a percent staging a comeback following Wednesday’s losses after being dragged down by shares exposed to the terror attacks and raids in France.

The U.K.’s FTSE 100 rose close to 1 percent and Germany’s DAX gained over 1 percent.

Leading the way up in Europe was Sodexo that  jumped over 10 percent, its biggest one-day gain since March 2003, after the French food-services company said it would cut costs further to cope with a volatile global economy, as many of its customers in the oil and mining industries have been hit by the decline in commodity prices.

Johnson Matthey PLC also enjoyed jump of close to 10 percent after the specialty chemicals maker declared a special dividend to shareholders after reporting a 60 percent rise in first half fiscal 2016 profit.

Elsewhere, shares in Royal Mail Plc finished up 5% after the company projected an increased level of cost cuts as it battles to boost the profitability of its domestic letters and parcels business

Over in the U.S, stocks struggled to repeat gains made during Wednesday’s session as health-care stocks weighed after a disheartening announcement from one of the country’s largest health insurers. UnitedHealth cut its profit forecast, off-setting gains in technology stocks.

In other single name stocks, Pfizer Inc. is in advanced talks to buy Allergan Plc for as much as $380 per share, valuing the Botox maker at as high as $150 billion, that is  if the U.S. government doesn’t get in the way of the drug industry’s largest-ever deal.

Square, the San Francisco-based company whose first product allowed merchants to take credit card payments via Iphone, began trading shares this morning on the New York Stock Exchange, after raising $243 million in its initial public offering. The IPO itself was disappointing with Square pricing shares at $9, compared to an $11-$13 per share offering range however the stock managed to jump more than 50% in early trading.

The sport apparel giant Nike Inc. announced a two-for-one stock split, a 14% increase to its quarterly dividend and said it has approval to buy back up to an additional $12 billion in shares, while splits don't change a company's value, they tend to generate renewed interest in the stock as the lower price makes it more attractive to a larger group of investors as the security becomes more retail friendly and potentially improves liquidity of the shares. The shares gained 3.5% after hours.

Companies reporting earnings today include Abercrombie & Fitch and Footlocker.

Furthermore Several ECB officials are scheduled to speak on Friday in Frankfurt, including President Mario Draghi. The euro fell for the first time in three days boosting speculation the European Central Bank will announce additional stimulus next month.

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.