LONDON (AP) — Shares in European car companies rebounded strongly Friday ahead of Volkswagen’s expected announcement of a new CEO, helping stock markets across the region to enjoy a buoyant end to what has been a volatile trading week.
KEEPING SCORE: In Europe, France’s CAC 40 spiked 3.6 percent to 4,502 while Germany’s DAX rose 3 percent to 9,716. Britain’s FTSE 100 added 2.5 percent to 6,112. U.S. shares were also poised for big gains at the open, with Dow futures and the broader S&P 500 futures up 1.5 percent.
AUTOS SURGE: Jitters over the emissions-rigging scandal at Volkswagen appear to have eased somewhat as traders awaited the outcome of the company’s supervisory board meeting, where a new CEO is expected to be announced. Sector gainers included Germany’s BMW, which was up 4 percent, and Daimler, the maker of Mercedez-Benz, rose 4.1 perent. French companies Renault and Peugeot Citroen were up 3.9 percent and 2.8 percent, respectively. VW was lagging, down 0.5 percent ahead of the announcement.
THE QUOTE: “Traders have decided enough is enough and the attractions of cheap European automotive shares outweigh the risks,” said Alastair McCaig, market analyst at IG.
YELLEN OVERSHADOWED: The ripple effects from the VW scandal overshadowed a keynote speech Thursday from Federal Reserve Chair Janet Yellen, at least in stock markets. In the speech, Yellen said she expects the Fed to begin raising interest rates by the end of the year. She suggested global economic weakness won’t be significant enough to alter the central bank’s plan to raise its key short-term rate from zero by December. Record low interest rates since the 2008 global financial crisis have been a boon for stock markets but as the U.S. economy recovers, abnormally loose financial conditions have to be tightened to prevent inflation from rising to levels that might hurt the economy.
DOLLAR GAINS: In the currency markets, Yellen’s speech was more of a driver than in stock markets, helping the dollar push ahead as traders priced in a growing likelihood of a rate hike this year. The euro was down 0.3 percent at $1.1151 while the dollar rose 0.7 percent to 120.98 yen.
ASIA’S DAY: Japan’s Nikkei 225 recouped earlier losses to finish up 1.8 percent at 17,880.51. South Korea’s Kospi fell 0.2 percent to 1,942.85. Hong Kong’s Hang Seng inched up 0.4 percent to 21,186.32. China’s Shanghai Composite dropped 1.6 percent to 3,092.35 and Australia’s S&P/ASX 200 shed 0.6 percent to 5,042.10.
ENERGY: Benchmark U.S. crude was up 41 cents at $45.32 a barrel in electronic trading on the New York Mercantile Exchange, while Brent crude, a benchmark for many international oils, rose 20 cents to $48.37 in London.
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