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EUROPE MARKETS: European Stocks End Higher, Erasing Earlier Losses Sparked By Cohn's Exit

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03/07/2018 | 06:08pm CEST

By Carla Mozee and Victor Reklaitis, MarketWatch

Analyst: 'Markets viewed Cohn as a voice of reason on trade policy'

Stocks across Europe finished with gains Wednesday, though shares of metal producers were hit after the resignation of White House economic adviser Gary Cohn.

The former Goldman Sachs executive was widely seen as a markets-friendly and stabilizing force in the Trump administration and his departure further stokes worries about the likelihood of a global trade war.

How markets are moving

The Stoxx Europe 600 index rose 0.4% to end at 372.71, bouncing back from a morning loss and building on Tuesday's gain of 0.1% .

Germany's DAX 30 index jumped 1.1% to 12,245.36, and France's CAC 40 index tacked on 0.3% to 5,187.83. The U.K.'s FTSE 100 index rose 0.2% to end at 7,157.84.

The euro traded at $1.2396, down slightly from $1.2404 late Tuesday in New York.

What's driving markets

Global equities declined but then pared losses as investors reacted to the news late Tuesday that Cohn is leaving his role as the head of President Donald Trump's National Economic Council. Cohn is seen as the driving force behind U.S. corporate tax cuts that were signed into law last year.

The news comes after Trump said he'll impose tariffs on steel and aluminum imports, a move Cohn had opposed. The president is expected to sign an order for across-the-board tariffs of 25% for steel and 10% for aluminum.

A global trade war sparked by the tariffs could sap demand for metals and weigh on economic growth world-wide. The Stoxx Europe 600 Basic Resources Index lost 0.2% on Wednesday after being down about 2% in morning action. U.S. stocks were falling Wednesday , though the losses were not as bad as feared after Dow Jones Industrial Average futures had shown a drop of more than 400 points shortly after the Cohn news.

Check out:Slumping stocks may 'test the February lows'--analysts react to Cohn's exit

The European Union said Wednesday it's discussing which U.S. products it would hit with tariffs if Trump moves ahead with his plan to levy global steel and aluminum imports. European Central Bank President Mario Draghi will likely be asked about his view about the potential tariffs and its impact on the eurozone, when Draghi on Thursday hold a press conference after the release of the central bank's latest monetary policy decision.


What strategists are saying

"Things calmed down somewhat this afternoon, though the Dow Jones [Industrial Average] is still looking pretty fearful of Trump's trade intentions now that Gary Cohn is gone," said Connor Campbell, a Spreadex analyst, in a note.

"European equity markets finished the day on a positive note, as traders shrug off talk of an American trade war," said David Madden, a CMC Markets UK analyst, in a note. "Equity benchmarks spent a large portion of the day in the red, but the fear appears to have melted away."

Check out:Meet Peter Navarro, the man who pushed Gary Cohn out of the White House


Stock movers

Rolls-Royce Holdings PLC shares (>> company sheet) leapt 11%. The aircraft engine maker swung to a 2017 pretax profit of GBP4.9 billion ($6.79 million) and said it expects mid-single-digit revenue growth in 2018.

With tariffs in the U.S. in sight, shares of miner Anglo American PLC fell 0.1%, while iron ore producers BHP Billiton PLC (>> company sheet) (>> company sheet) and Rio Tinto PLC (>> company sheet) gave up 1.7% and 0.2%, respectively

Smurfit Kappa Group PLC (SK3.DB) rose 6.3% after International Paper Co. said it remains ready to discuss its rejected takeover bid () for the Irish packaging company as it set out details of its EUR8.6 billion euro ($10.7 billion) offer.

Paddy Power Betfair PLC (PPB.DB) fell 3.4% as the company warned that sustained bookmaker-friendly sporting results had hurt customer activity in early 2018 .

Stocks mentioned in the article
ChangeLast1st jan.
CAC 40 0.25% 5404.12 Real-time Quote.2.60%
DAX 0.49% 12742.22 Delayed Quote.-1.86%
DJ INDUSTRIAL -1.15% 24700.21 Delayed Quote.-0.08%
FTSE 100 INDEX 0.28% 7234.11 End-of-day quote.-5.90%
NASDAQ 100 -0.32% 7228.0434 Delayed Quote.13.43%
NASDAQ COMP. -0.28% 7725.5851 Delayed Quote.12.21%
S&P 500 -0.41% 2762.57 Real-time Quote.3.96%
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