European markets trade higher as Boris Johnson wins UK leadership race; autos surge 4.2% - CNBC

European stocks traded higher Tuesday as investors digested Boris Johnson's victory in the race to become U.K. prime minister, while looking ahead to the European Central Bank (ECB) monetary policy meeting on Thursday.

European Markets: FTSE, GDAXI, FCHI, IBEX

The pan-European Stoxx 600 was up by around 1% in afternoon trade, auto stocks soaring 4.2% to lead gains while retail stocks slipped 0.3% as one of only three sectors in the red.

Johnson was elected to lead the Conservative Party by its 160,000 members ahead of rival Jeremy Hunt, and will become U.K. prime minister on Wednesday.

Global stocks have appeared to receive support from expectations that both the ECB and the U.S. Federal Reserve could soon cut interest rates.

The ECB is seen cutting rates by 10 basis points on Thursday, with the U.S. central bank expected to lower rates by 25 basis points at the end of the month.

Sterling pared its losses against the U.S. dollar following Johnson's election to trade around the flatline at $1.2474, with Johnson's election largely priced in by the markets.

Some market participants are concerned Johnson could pull the U.K. out of the bloc on October 31 without a trade deal in place in order to appease hard-line anti-EU members of the party.

Johnson has insisted the U.K. must leave the EU by the October 31 deadline "come what may," while Hunt has said he would be prepared to further delay the withdrawal process, if required, to secure a new divorce deal.

Earnings in focus

Shares of French auto parts maker Faurecia climbed 10.4% after it missed expectations but maintained first-half profitability despite a China-led decline in auto production, while fellow parts makers Hella and Valeo both jumped more than 6%, driving the European automotive sector higher.

BMW stock rose 4.7% after Morgan Stanley upgraded its stock, while shares of Porsche, Volkswagen, Daimler and Continental all climbed more than 4% to further contribute to the automotive surge.

Chipmaker stocks also saw a windfall on Tuesday, led by Apple supplier AMS, which saw its stock rise 4.3%, slightly paring early gains after it beat revenues and issued optimistic guidance for the third quarter of 2019.

Computer parts maker Logitech climbed 8% on the back of better-than-expected first quarter earnings.

Bank stocks are also high on the agenda, with UBS shares trading 2.2% higher after the Swiss giant beat forecasts with a second-quarter net profit of $1.4 billion. Santander shares were up more than 3% after it slightly beat expectations despite a net profit decline of 18% due to restructuring costs.

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https://www.cnbc.com/2019/07/23/europe-stock-markets-uk-set-to-usher-in-new-prime-minister.html

2019-07-23 04:56:00Z
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