European stocks traded in cautiously positive territory Wednesday, following yet another record-setting day on Wall Street, as the global equity rally in the wake of President elect Donald Trump's election victory continues to rumble on.
Britain's FTSE 100 added around 40 points by 11:00 GMT, rising around 0.64% to 6858 points, led by basic material and energy stocks. Germany's DAX performance index, however, fell 43 points, or 0.41%, as banking stocks declined following new rule proposals from the European Commission. France's CAC-40 was also down by about 0.4% mid-day in Paris.
European bank stocks fell across the board after the European Commission unveiled plans to tighten capitalisation rules and introduce requirements for U.S. and foreign lenders operating in the EU.
Europe's Stoxx 600 Banks index fell around 1% by 10:30 GMT while the shares of major European banks fell in concert, holding down gains for broader equity indices.
Germany's Commerzbank (CRZBY) was one of the session's biggest decliners, with shares falling 3% in Frankfurt trading to €6.72 each. Deutsche Bank (DB) - Get Report was another notable decliner, with shares down 1.5% to €14.68. In Switzerland, Credit Suisse (CS) - Get Report was off 2% to Sfr13.66.
Infineon Technologies (IFNNY) shares were another notable mover in Frankfurt, rising around 0.9% to €16.54 each after the chipmaker posted lower-than-expected four quarter profits Wednesday but lifted its margin guidance for the near-term amid the strengthening U.S. dollar.
The Neubiberg-based chipmaker, whose customers include Apple (AAPL) - Get Report and Samsung Electronics (SSNLF) ,said revenues for the three months ending in September came in at €1.675 billion, up 4.8% from the same period last year. Operating profit, however, fell 2% to €280 million, slightly below analysts' forecast of €285 million.
Wall Street scored record closes for its benchmark indexes for the second day in a row Tuesday, unimpeded by a decline in crude oil prices. The S&P 500 was up 0.21%, the Dow Jones Industrial Average added 0.35% to close at 19,023 and the Nasdaq rose 0.33%. The Dow traded above a milestone 19,000 for the first time earlier in the session.
Global oil prices were little-changed in Europe as investors pared bets that OPEC members will be able to agree on their first collective production cuts since 2008 at a meeting next week in Vienna. Brent crude for January delivery, the global benchmark, rose 0.1% to $49.98 per barrel while WTI future for the same month were 0.22% higher at $48.24.
U.S. bond yields stabilised in Asia trading, with benchmark 10-years trading at around 2.31%, but the overall pull of higher rates continues to change dynamics in debt markets around the world, and particularly in Europe, as investors re-calibrate their assumptions for monetary policy difference between major central banks.
Yields Germany's 2-year government bonds (which move opposite to prices) hit a record low of -0.74% early Wednesday following a series of comments from key European Central Bank rate-setters that point to an extension of its €1.5 trillion quantitative easing program beyond its March 2017 deadline.
However, market reaction to a Reuters report that the ECB is ready to lend more of the billions in government bonds it has bought through its QE program sent yields spiking later in the session, with 10-year bunds jumping 6 basis points to 0.27% and 10-year French governments bond yields rising 4 basis points to 0.79%.
The dollar kicked-off trading in Europe down about 0.1% from Tuesday's levels, but traders added to the greenback's value and marked it 101.02 against a basket of six global currencies by 11:00 GMT.
The dollar's gains pushed the pound 0.31% lower to 1.2377 ahead of a major budget statement from U.K. finance minister Philip Hammond at mid-day. The euro was also weaker, falling 0.25% against the dollar to 1.0602 even after a better-than-expected reading of private-sector economic activity in the month of November.
Markit's benchmark PMI index was estimated at 54.1, up from 53.3 in the previous month and the sharpest increase of the year. Markit's chief economist said the reading was consistent with a four quarter GDP reading of 0.4%.
"ECB policymakers will also be pleased to see inflationary pressures are intensifying steadily. Average prices charged for good and services showed the biggest rise for over five years, albeit with the rate of increase being very modest," said Markit's Chris Williamson. "However, with indicators such as rising backlogs of work and longer supplier delivery times suggesting demand is exceeding supply, price pressures look set to intensify further in coming months."
Indications from U.S. stock futures prices suggest another record setting session Wednesday, with the Dow gaining 11 points, the SP& 500 2.5 points and the Nasdaq 6.5 points at the opening bell.