StockBeat: Cheap Currencies (and Little Else) Support Europe Stocks

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By Geoffrey Smith — Europe’s stock markets have recovered their poise after U.S. politics caused a fresh bout of jitters on Thursday, but they’re still on course to end the week lower.

The biggest prop to markets across the continent appeared to be a cheap currency. The biggest gainer was the , led by exporters and natural resource companies after Bank of England hawk Michael Saunders said that the U.K. economy would need , if it can avoid a disorderly ‘no-deal Brexit’.

Saunders’ speech depressed sterling by around half a percent against the and a third of a cent against the . In response, miners Glencore (OTC:), Anglo American (OTC:) and BHP Billiton (NYSE:) all rose more than 2%, while index heavyweights Royal Dutch Shell (NYSE:) rose 1.8% and BP (NYSE:) rose 1.4%. The biggest loser in London was Imperial Brands PLC (LON:), which lost another 4.8% in the wake of Thursday’s profit warning, which revealed the scale of the damage to its business from the backlash against vaping products.

The for its part was also staying cheap, after more weak business confidence surveys out of Spain and Italy and a sharp drop in German import prices that underlined the return of deflationary pressures to the euro zone. It touched a new two-year low of $1.0905 overnight and recouped only little of that in Friday morning trading in Europe. Export-sensitive chemicals group BASF was the top gainer in the SPDR Euro Stoxx 50 (NYSE:), with other globally-exposed names including Siemens, Nokia (HE:), Daimler and Adidas (DE:) all rising between 1% and 1.9%.

By 5:10 AM ET (0910 GMT), the benchmark was up 0.3% at 391.40, although that’s still on course for a small weekly decline. Germany’s was up 0.5%, while France’s was up 0.2%.

There was no obvious sense of unease emanating from the U.S. IPO market, which has had a ragged couple of weeks with the postponement of Endeavor Group and We Company’s deals in quick succession. While exercise bike-maker Peloton (NASDAQ:) got its deal away on Thursday, it fell some 11%.

By contrast, software group TeamViewer (DE:), which became the biggest tech IPO in Germany in 19 years this week, recovered 2.5% on Friday to trade above its IPO price.

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