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European stock indices show a slight increase, helped by easing fears about the consequences of Brexit. Investors expect that central banks will continue to provide support after the decision of the UK to leave the EU.
Yesterday the head of the Bank of England Governor Mark Carney signaled that the Bank of England on the background of the results of the referendum may reduce interest rates during the summer. He added that the Bank of England has a number of other tools to support the economy and the banking system, which may indicate a resumption of the bond purchase program. Lower interest rates lead to a weakening of the national currency, making it less attractive to investors.
"We believe that the downside risks for the pound remain significant, since the referendum effects become more apparent, and the ruling and opposition parties are in a political struggle," - noted Scotiabank experts.
At the same time, a representative of the ECB, Pret, said that the ECB is determined to ensure price and financial stability. According to him, the key rate will remain at current levels for an extended period. "The effect of the ECB's policy on the economy gradually increases. However, I see increased risks, including external". - The politician said.
The focus of investors was also statistics on Britain and the euro zone. A report published by Markit Economics and CIPS showed that the index of manufacturing activity in Britain rose in June to 52.1 points compared to 50.4 points in May. The last reading was the highest since January. Analysts had expected the index to decline to 49.9 points. It is worth emphasizing, the data were collected prior to the referendum. Employment declined for the sixth consecutive month, but the purchasing and selling prices increased. Meanwhile, exports of industrial products grew at the fastest pace in seven months.
With regard to the data for the euro area, Markit Economics said that business activity in the manufacturing sector has grown significantly in June, registering maximum growth since the beginning of this year. However, experts warn that the decision of Britain to leave the EU can slow down the sector in the coming months. According to the report, the final manufacturing PMI index rose in June to 52.8 points versus 51.5 points. Previously it was reported to increase to 52.6 point. The sub-index measuring the volume of production, jumped to 53.9 points from 52.4 points, which was a little more tha forecasts.
The composite index of the largest companies in the region, Stoxx Europe 600, up 0.1 percent. Currently, the index is on track for its biggest weekly gain in a month.
Automakers shares shows the most increase among the 19 industry groups capitalization of the Stoxx 600. Volkswagen AG and PSA Peugeot Citroen rose more than 4 percent.
Temenos Group AG climbed 3.9 percent after the Swiss software maker said that Standard Chartered Plc will use their software on more than 30 markets.
Telefonica Deutschland Holding AG fell by 4.5 percent, as experts at Credit Suisse Group AG downgraded the stock to 'neutral', citing increased competition in Germany.
At the moment:
FTSE 100 6,518.24 +13.91 + 0.21%
CAC 40 4,240.41 +2.93 + 0.07%
DAX 9,683.77 +3.68 + 0.02%