EUROPE MARKETS: Europe's Indexes Buoyant After Buyback Announcements From Lloyds And Glencore
By Emily Horton
The majority of Europe's indexes remained buoyant on Wednesday, as buyback announcements from heavyweights Lloyds Banking Group PLC and Glencore PLC lifted share prices and kept markets mostly positive.
News of the buybacks helped counter lower profits at both firms, and a merger blow handed out by the U.K.'s Competition and Markets Authority to supermarkets J Sainsbury PLC and Asda Group Ltd, the U.K. subsidiary of Walmart Inc.
How are markets performing?
The Stoxx Europe 600 gained 0.1% to 369.44 on Wednesday, after finishing 0.2% down on Tuesday.
Spain's IBEX 35 led the region's gainers adding 0.4% to 9,173.50, while the German DAX climbed by 0.2% to 11,331.97 and France's CAC 40 rose by 0.1% to 5,167.62.
The FTSE 100 remained mostly flat at 7,183.67, while the Italy's FTSE MIB index dropped by 0.1% to 20,206.72.
The euro remained flat on Wednesday, at $1.1346, while the pound fell to $1.3034 from $1.3063 late in New York on Tuesday.
What's driving the markets?
Buyback announcements from two heavyweights lifted the markets on Wednesday.
UK-listed bank Lloyds Banking Group set out plans for a major share buyback and brought forward its cost-cutting targets , leading to an almost 3% rise in the bank's shares. However, the bank also reported lower than expected profits.
Meanwhile, Anglo-Swiss miner Glencore also launched a new $2 billion buyback program, resulting in a 2% rise in the company's shares, despite reporting a 41% profit loss.
However, U.K. retailer J Sainsbury was the region's biggest faller, down as much as 15% after the U.K's Competition and Markets Authority said it could potentially block its merger with Asda Group Ltd. if the regulator's concerns can't be addressed.
"There is now serious doubt over the deal, enough to send Sainsbury's 14% lower, forcing the orange supermarket to a 10 month low of GBP2.50", Connor Campbell, a financial analyst at Spreadex said.
In Brexit news, U.K. Prime Minister Theresa May is set to meet European Commission president Jean-Claude Juncker in Brussels on Wednesday and will try to secure legally-binding changes to the withdrawal agreement they struck last year, Bloomberg reports (https://www.bloomberg.com/news/articles/2019-02-19/britain-targets-brexit-deal-within-days-as-may-heads-to-brussels). Meanwhile, three pro-European lawmakers from her Conservative Party announced their defection to a new centrist grouping in the U.K. parliament, citing Brexit as a key concern.
What stocks are active?
Another buyback announcement from German medical supplies company Fresenius Medical Care AG & Co. (FMS), prompted a 4% rise in the stock.
Meanwhile, U.K. supermarket Wm. Morrison Supermarkets PLC (MRW.LN) also saw a 5% dip in its share price, despite the fact that it "arguably would have been one of the worst hit by a successful tie-up" between J Sainsbury and Asda, according to Campbell.
Laith Khalaf, an analyst at stockbroker Hargreaves Lansdown, said: "It's an ill wind indeed which blows no-one any good, but that seems to be the order of the day with Tesco and Morrison selling off too... this suggests the market is concerned Walmart may now seek to sell off Asda to another party."