Europe close: Shares run-up on the heels of as expected US election results
CaixaBank SA
€4.94
18:15 24/04/24
Stocks across the Continent are trading on the front foot as investor breathe a sigh of relief that the US midterm elections on Tuesday night didn't yield any surprises that might 'rock the boat'.
IBEX 35
11,027.80
18:44 24/04/24
IBEX TOP DIVIDENDO
3,111.90
18:44 24/04/24
Markets had treaded cautiously in the run-up to the ballot due to the impossibility of discarding the risk of unexpected surprises.
Potential political gridlock on Capitol Hill might result in a flatter US Treasury yield curve as markets priced-out the possibility of further fiscal stimulus in the near-term and a weaker dollar initially, said strategists at Bank of America-Merrill Lynch.
Further out, it was possible that US Republicans and Democrats might reach a "compromise" on more fiscal stimulus, with the latter apparently making the case for more investment in infrastructure, BofA-ML added.
However, the investment bank's strategists believed US President Donald Trump's negotiating position vis-a-vis China may well have been weakened.
By the end of the session, the FTSE Mibtel was ahead by 1.42% or 272.65 points at 19,540.94, alongside a gain of 1.24% or 62.75 points to 5,137.94 for the Cac-40, while the benchmark Pan-European Stoxx 600 was advancing 1.06% or 3.84 points to 366.39.
From a sector standpoint, Oil&Gas shares did well throughout most of the session, with the corresponding Stoxx 600 sector gauge ending 1.38% higher at 338.31 after Russia and Saudi signaled the possibility of crude oil output cuts starting from early 2019.
But a larger-than-expected build in US crude oil stockpiles tempered gains.
Bank shares were also doing well, with the sector gauge adding 1.18% to 147.83 on the heels of a ruling overnight by Spain's Supreme Court in favour of the country's lenders, reversing an earlier decision dating from 18 October which some analysts said risked leaving Spanish banks on the hook for roughly €5.0bn in back-taxes on stamp duty for mortgages.
However, in a follow-up and somewhat Salomonic announcement and amid criticism from some opposition parties, Spanish PM, Pedro Sanchez, said that the current law would be changed so that in future lenders would be responsible for paying stamp duty on mortgages.
Boosted by gains in shares of some the country's main lenders, such as Caixabank or Santander, the Ibex 35 outperformed on Wednesday, climbing 1.99% to 9,167.90.
Significantly, the yield on the benchmark 10-year Italian government note was down by six basis points to 3.34% after Deputy Prime Minister, Matteo Salvini, ruled out the risk that the coalition government might collapse due to differences regarding the overhaul of the existing statute of limitations.
On the economic front, upwards revisions to prior months' data meant that German industrial production for the month of September came in ahead of forecasts at up by 0.2% month-on-month (consensus: 0.1%), although economists continued to expect German GDP to shrink by 0.1% in the third quarter, weighed down by a large fall in industrial output.
In company news, BMW shares dropped sharply after the luxury automaker's third quarter sales fell short of forecasts and management issued a downbeat outlook.
According to the firm's finance chief, BMW was making preparations to head off the risk of trade wars, from Brexit and "regulatory challenges".
Shares of Spain's Banco Sabadell gained following the Supreme Court's ruling on Tuesday night, advancing by some 2.5% although they were well off their earlier highs, having jumped by 15% at the opening bell.