The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, April 11, 2019. REUTERS/Staff
April 12, 2019
By Susan Mathew
(Reuters) – European shares finished higher for a third straight day on Friday, with investor sentiment getting a boost from JP Morgan setting a strong start to U.S. earnings and amid signs of stabilization in China’s economy.
The pan-European STOXX 600 index closed up 0.16 percent, but ended the week lower after two weeks of gains. Banks and the auto sector were the biggest boosts to the benchmark on the day.
Italy’s MIB led gains in the region with its 0.8 percent rise, having hit an eight-month high earlier the session, while German shares closed up 0.5 percent.
Data showed that China’s exports rebounded to a five-month high in March, but imports shrank for a fourth straight month and at a faster pace, painting a mixed picture of the economy.
“The markets seems to have shaken off the negative aspects of the Chinese trade data, but it’s a minor rise at the end of a fairly limp week,” said Connor Campbell, an analyst at Spreadex.
Banks got a boost after shares of the largest U.S. bank by assets rose after the company beat quarterly profit estimates, easing fears that slowing economic growth could weigh on its results.
Regional lenders, such as StanChart, Deutsche Bank, BNP Paribas and Credit Suisse rallied, taking the European bank index up 1.9 percent to a five-month high.
HSBC was among the biggest driver of gains on the pan-region benchmark. The firm said it so far moved only a “tiny” number of jobs to Paris in order to deal with Brexit..
Italy’s biggest bank, UniCredit rose more than 4 percent even after it said is one of the banks accused of running a cartel in trading euro zone government bonds between 2007 and 2012, when financial crises dragged down banks and several European economies.
The auto sector followed suit with car-makers such BMW, Daimler and Fiat Chrysler gaining more than 2.2 percent each.
Amid warnings that proposed U.S. automotive tariffs could do more damage to global growth than the ongoing U.S.-China trade dispute, BAML analysts point to a lack of action out of the U.S. on threatened auto tariffs.
“In our view, the reluctance to move forward is because actually imposing auto tariffs would be both deeply unpopular and a major shock to the equity markets.”
Basic resources stocks also gained with iron ore and copper prices on the rise. Rio Tinto and Glencore were among top boosts to Britain’s blue-chip index higher.
Airbus gained as its new chief executive, Guillaume Faury, imposed a simplified management structure and a manifesto for factory modernization.
GN Store Nord rose 7.8 percent after the Danish audio-maker raised financial guidance. Medical technology supplier Carl Zeiss climbed 6.6 percent on strong full-year guidance.
Swiss train and carriage manufacturer Stadler Rail jumped 13.4 percent after its debut on the SIX Swiss Exchange.
On the other hand, London-based online trading platform Plus500 tumbled 31.2 percent as revenue for the first quarter dropped to around a fifth of last year’s, hurt by a fall in trading volumes.
(This story has been refilled to correct country of index in paragraph 3 to say Italy’s MIB, not Spain’s MIB)
(Reporting by Medha Singh and Agamoni Ghosh and Susan Mathew in Bengaluru, editing by Larry King)
FILE PHOTO: Portugal’s Finance Minister and Eurogroup President Mario Centeno attends a eurozone finance ministers meeting in Brussels, Belgium February 11, 2019. REUTERS/Francois Lenoir/File Photo
April 12, 2019
By Jan Strupczewski
WASHINGTON (Reuters) – Europe must raise the international profile of its euro currency to protect itself from the domination of a “weaponised” U.S. dollar and help stabilize the international monetary system, the chairman of euro zone finance ministers Mario Centeno said.
“Washington’s inclination to use the dollar as a tool to complement the effect of economic sanctions and serve a narrow domestic agenda is a source of concern,” Centeno told the Reinventing Bretton Woods Committee in Washington on Friday.
“The foundations of the international monetary system are wobbling, as currencies are used to advance national interests that are narrowly defined. For some observers, the system in which the dollar holds a dominant and unrivalled position is on the cusp of reformation,” he said in a speech.
The European Union started thinking about increasing the role of the euro last year after U.S. President Donald Trump decided to abandon the 2015 deal under which international sanctions on Iran were lifted in return for Tehran accepting curbs on its nuclear program.
The U.S. move, though unilateral, means European companies also cannot trade with Iran, fearing they would be cut off from U.S. markets and the international payments system in retaliation.
Centeno said the world could be heading toward a multi-currency system in which the dollar would vie for dominance with others, notably the euro and the Chinese renminbi.
He said such a multi-polar currency system could improve the functioning of the international monetary system and would be less prone to the economic fluctuations of the dominant dollar by offering options to diversify currency reserves.
The euro is used in around 36 percent of international payments, just behind the dollar with almost 40 percent, but when it comes to foreign exchange trading 44 percent is in dollars but only 16 percent in euros, Centeno said.
The favorite for currency reserves is the dollar with a 62 percent share of global reserves, while the euro has a 20 percent share.
“In Europe there is a growing concern that we are exposed to the risk that the power of the dominant dollar can be used against our best interests. The obvious consequence of ‘America First’ is that others will come second, at best,” Centeno said.
“The feeling is that we can only rely on ourselves and our currency. And this is behind repeated calls to strengthen the international role of the euro,” he said.
Centeno noted however, that to achieve a stronger role, the euro zone needed to tackle many tough issues about the design of the single currency.
He said the 19 countries sharing the euro had to first complete their banking union, by agreeing on a European deposit insurance system and setting up a capital markets union.
Other needs include a budget for the euro zone, under discussion now, and creating a euro zone safe asset – a debt instrument backed by all euro zone countries – with a sufficiently deep and liquid market, an idea that now faces very strong opposition from several key euro zone countries.
(Reporting By Jan Strupczewski; Editing by Andrea Ricci)
Japanese Finance Minster Taro Aso leaves the G-20 Finance Ministers and Central Bank Governors’ meeting at the IMF and World Bank’s 2019 Annual Spring Meetings, in Washington, April 12, 2019. REUTERS/James Lawler Duggan
April 12, 2019
WASHINGTON (Reuters) – Global policymakers worry that weakness in key economies could spread and cause the world economy to slow more than expected, Japanese Finance Minister Taro Aso said on Friday.
“The balance of risks remains skewed to the downside,” Aso said in a news conference following a meeting of finance ministers and central bankers from the Group of 20 industrialized countries.
“We recognize the risk that growth prospects might deteriorate if weakening in key economies feed into each other.”
(Reporting by David Lawder and Leika Kihara; Writing by Jason Lange; Editing by Paul Simao)
FILE PHOTO: Tesla CEO Elon Musk leaves Manhattan federal court after a hearing on his fraud settlement with the Securities and Exchange Commission (SEC) in New York City, U.S., April 4, 2019. REUTERS/Shannon Stapleton
April 12, 2019
By Lawrence Delevingne
NEW YORK (Reuters) – David Einhorn’s Greenlight Capital renewed criticism of Elon Musk and his Tesla Inc, saying the electric car company again appeared to be on the “brink” of failure, according to a letter sent to clients of the hedge fund on Friday.
The letter cited a lack of demand, “desperate” price cuts, layoffs, “closing-and-then-not-closing” stores, closing service centers, slashing capital expenditures, rushed product announcements and “a new effort to distract investors from the demand problem with hyperbole over TSLA’s autonomous driving capabilities.”
“We believe that right here, right now, the company appears to again be on the brink,” the letter said. Greenlight is short Tesla stock, recently a profitable bet.
Tesla did not immediately reply to a request for comment.
Greenlight said its funds gained 11 percent over the first three months of 2019, slightly below the gain of the S&P 500 Index. Despite the gains so far this year, “it continued to be a challenging environment for our investment style with growth stocks performing much better than value stocks,” the letter said. “In the context of this headwind and a sizable short portfolio, we are pleased with the quarterly result.”
Greenlight noted that last summer, Musk promised Tesla would be profitable and cash flow positive in every quarter going forward. “He repeated that forecast as recently as the end of January,” Greenlight pointed out. “That promise has failed to materialize. The question at hand is: in a few months will Musk be again bragging that he saved the company from the brink of failure, or will TSLA in fact fail this time?”
Greenlight Capital and its founder Einhorn first rose to prominence for making a prescient call on Lehman Brothers’ accounting troubles before the firm’s collapse. Late last year, Greenlight compared Tesla to Lehman.
(Reporting by Jennifer Ablan and Svea Herbst-Bayliss; Editing by Chizu Nomiyama and Susan Thomas)