Europe close: Stocks finish off their best levels amid geopolitical jitters
Stocks on the Continent finished higher on the back of a more dovish than expected US central bank policy announcement overnight, according to traders, although heightened geopolitical tensions following the downing of a US drone over the Strait of Hormuz saw investors take some money off the table.
Overnight, Federal Reserve chairman, Jerome Powell, pledged to do what it takes to keep the US economic expansion going, with the economic projections published alongside the policy statement revealing that 7 of 17 FOMC menbers believe two interest rate cuts will be needed in 2019.
"One dovish central bank in a week is perhaps an outlier, but two is a trend. The Fed has opened the door to rate cuts, with Jerome Powell firmly dovish in last night’s meeting and, crucially, in the press conference as well," IG's Chris Beauchamp told clients.
"Markets were expecting a dovish outlook from the US central bank, but many were loathe to think that the Fed would be even more dovish. That is what they got however, with the possibility of a 50bps move being left to hang in the air."
By the end of trading, the benchmark Stoxx had gained 0.36% to 386.16, alongside a gain of 0.38% to 12,355.39 for the German Dax and an advance of 0.66% to 21,361.44 for the FTSE Mibtel.
The Stoxx 600's bank sector gauge on the other hand fell 1.29% at 132.97 and that for Oil&Gas up by 1.36% to 326.98.
Also on the back of the US Fed's decision overnight, euro/dollar was adding 0.6% to 1.12925.
Front month Brent crude oil futures added 3.8% to $64.25 a barrel alongside on the ICE after Iran's Revolutionary Guard shot down a US military drone, near the entrance to the Strait of Hormuz, with August-dated gold futures on COMEX jumping by 3.22% to $1,392.20/oz..
Iran's military said the drone was shot down inside its airspace, near Kuh Mobarak, but the US disputed that claim, saying that it occured in international airspace.
Elsewhere on the economic front, Norway's central bank raised its benchmark interest rate by 25 basis points to 1.25%, as expected, and signalled that further hikes were possible.
In Spain, the spotlight on the province of Navarre, amid speculation that the Socialist party's decision to allow the Basque nationalists of the PNV parrty into the regional government, alongside EH Bildu, which in the past has been linked to Basque terrorist group ETA, might help President-elect Pedro Sanchez to clinch enough votes to form a government in Madrid.
Yields on the benchmark 10-year Italian government note were moving nine basis points lower to 2.02%.
On the economic front, the European Commission's euro area consumer confidence index fell from a reading of -6.5 for May to -7.2 in June (consensus: -6.5).