European equity markets rose on bullish sentiment as JP Morgan Chase posted better-than-expected earnings and showed readiness to pay off Troubled Asset Relief Program funds; Copper prices dropped as China GDP indicates a slowing growth rate.
[U][B]Europe Session Key Developments[/B][/U][B]
• JP Morgan Chase Beats Profit Expectations; Prepared to Return TARP Funds
• Copper Prices Fall on Unimpressive China GDP Report[/B]
European equity markets rose on bullish sentiment as JP Morgan Chase posted better-than-expected earnings and showed readiness to pay off Troubled Asset Relief Program funds; Copper prices dropped as China GDP indicates a slowing growth rate. Through the previous trading sessions, we can see that news involving the financial sector created a significant impact on equity markets. Following this pattern, stocks rallied today as JP Morgan Chase released their first quarter earnings report, posting profits of 40 cents per share while surveys only forecasted 32 cents. Adding to the upbeat news, the bank’s CEO Jamie Dimon announces that JP Morgan Chase currently has enough reserves to return the $25 billion TARP funds “tomorrow” if the US government is willing to accept the repayment. However, the government will not likely approve of such strategy yet as only JP Morgan Chase and Goldman Sachs, who raised $5 billion in common shares to cover a necessary TARP reimbursement, has indicated any willingness to pay off the government debt. Meanwhile, copper prices decline as China releases an unimpressive Gross Domestic Production reading of 6.1%. Although China’s economy is in better shape than most major nations currently, a gradual slowdown in growth indicates a decreased demand for metals as well since China remains to be one of the world’s largest metal consumers. Looking into tomorrow, market participants will remain wary as Citigroup is forecasted to report a loss of 33 cents per share.
[B]FTSE 100 4,052.98 +84.58 +2.13%[/B]The FTSE had the most gains out of all the major indices with all sectors closing in the green except for Technology, which had a 1.17% decline. Besides sharing bullish sentiment from JP Morgan earnings release, Barclays and Lloyds rose 7.72% and 8.61%, respectively as Barclay’s President Robert Diamond stated outstanding earnings the bank achieved last quarter will not be a one-time occurrence. One of the worst performers were Bunzl, UK’s largest supplier of vending machines as reported sales did not meet analyst expectations.
[B]CAC 40 3,038.18 +52.44 +1.76%[/B]
France’s leading index climbed higher with all sectors also closing in the green except one sector, Oil & Gas. STMicroelectronics increased 5.75%, leading the Technology sector higher despite cutting quarterly dividends 67% to 3 cents a share. Unibail-Rodamco also rose 1.22% even though Morgan Stanley current rates the stock “overweight.”
[B]DAX 4,609.46 +59.67 +1.31%[/B]
German equities rallied, continuing the pattern of all sectors posting gains except one, Technology. Also similar is the Financial sector with Deutsche Bank and Commerzbank increasing 6.05% and 4.33% after JP Morgan released an impressive earnings report. Volkswagen, Europe’s largest car-maker fell 1.91% after new car registrations were reported as contracting 9.1%.
[B]IBEX 35 8,874.50 +162.60 +1.87%[/B]
The IBEX advanced higher with Health Care, Financials, Industrials, Utiltiies, and Oil & Gas gaining more than 2%. With the Banco Popular and Banco Santander gaining 3.93% and 3.40%, the Financials sector was able to gain 2.62%. Gestevision Telcinco, Spain’s largest commercial television station fell 13.71% after Goldman Sachs from “buy” to “neutral.”
[B]S&P/MIB 18,154.00 +343.00 +1.93%
[/B]Italy’s leading index showed similar movement to the major indices with Technology and Basic Materials gaining over 3%. Fiat gained 2.36% as the auto unit’s chief Lorenzo Sistino announced sales were “quite good” to reporters. Unipol, Italy’s fourth largest insurer gained 10.45% as the company’s CEO hinted at a first quarter profit.
