European stocks, Dow futures rise on stimulus hopes, while Bayer skids on profit warning

Published In MarketWatch

Europe Markets

German chemicals giant Bayer’s logo is pictured at its headquarters in Leverkusen, Germany.


roberto pfeil/Agence France-Presse/Getty Images

European stocks rose on Thursday, the first day of the final quarter, helped by hopes that U.S. lawmakers will reach a deal to provide new stimulus.

The Stoxx Europe 600
SXXP,
+0.49%

climbed 0.3%, and apart from the German DAX
DAX,
+0.12%
,
other indexes rose, with the French CAC 40
PX1,
+0.65%

and U.K. FTSE 100
UKX,
+0.88%

advancing.

Futures on the Dow Jones Industrial Average
YM00,
+0.90%

rose 196 points.

The Stoxx Europe 600 rose 0.2% in the third quarter, underperforming the 8.5% advance for the S&P 500
SPX,
+0.82%

over the same time frame, as the euro
EURUSD,
+0.15%

advanced 4.3% against the dollar.

The backdrop of elevated coronavirus cases continues in Europe. New rules in Spain mean that a majority of the country’s regions will limit public service and retail to 50% capacity, while France may introduce new restrictions on Thursday night. Per person, Spain, France and the Netherlands have the highest rate of new cases over the last seven days of the world’s largest countries, according to data tabulated by Deutsche Bank.

One key question in the short term is whether the U.S. will pass an additional stimulus bill. Analysts at Goldman Sachs called that prospect “unlikely” and said that if House Democrats take a vote on their $2.2 trillion package, then that would signal the end of negotiations with the White House. But investors took heart from signs of progress announced by U.S. Treasury Secretary Steven Mnuchin.

“While the two camps are still some distance apart on the price tag, with the Democrats at $2.2 trillion and the White House around $1.6 trillion, there is talk of an ‘escalator clause’ that could be the magic card that bridges this gap,” said Marios Hadjikyriacos, investment analyst at XM.

STMicroelectronics
STM,
+6.40%

rose 6% in Milan, as the chipmaker raised its 2020 revenue outlook after stronger-than-forecast third-quarter revenue of $2.67 billion. The company reported a “sharp” acceleration in demand for automotive product and microcontrollers chips. Another chipmaker, Infineon Technologies
IFX,
+7.67%
,
also gained ground.

H&M
HM.B,
+7.75%

shares rose 7%, as the Swedish fashion chain declared the worst was over from the pandemic. Its third-quarter earnings beat expectations, as it said sales in September fell 5% and that it plans to close 250 stores next year.

Bayer
BAYN,
-10.05%

shares slumped 10% as the German pharmaceutical and chemicals company said next year’s core earnings per share will be slightly below this year’s at constant exchange rates, with sales flat.

Bayer said the agricultural sector is being hurt by low commodity prices for major crops, intense competition in soy, and reduced biofuel consumption, and moves in the Brazilian real are further hurting the company. It’s going to take impairment charges up to “high-single-digit” billion euros in its agricultural business.

Rolls-Royce
RR,
-7.88%

shares fell 11%, as the struggling U.K. aircraft engine maker said it would sell £2 billion in shares priced at a 41% discount to Wednesday’s close, and raise at least £1 billion more in the bond market.