European Markets Soar on Fed Move and Economic Data

Lucy Stoeva
17 Dec, 2015
New York City

European markets surged after the Fed lifted rates and signaled improving economy. U.K. retail sales were ahead of expectations and construction activities in the euro zone also rose. AstraZeneca agreed to acquire Acerta Pharma for

[R]4:00 PM Frankfurt – European markets surged after the Fed lifted rates and signaled improving economy. U.K. retail sales were ahead of expectations and construction activities in the euro zone also rose. AstraZeneca agreed to acquire Acerta Pharma for £2.7 billion.[/R]

Stock markets across Europe surged on Thursday after the U.S. Federal Reserve increased the benchmark interest rate for the first time in nine years, and the latest releases of European economic data signaled an upward trend.

The widely anticipated rate hike was welcomed by investors around the globe as a sign of improving U.S. economy but the central bank cautioned that the future rate hikes will be gradual and dependent on the inflation rate.

In the euro zone, October production in the construction sector increased by 0.5%, while in the European Union the growth was 0.1% compared to the previous month, according to first estimates by Eurostat.

The data indicates a positive trend, as in September production in construction declined by 0.7% in the euro zone and by 0.2% in the EU28.

During the third quarter, job vacancy rate in the euro area was 1.6%, down from 1.7% in the previous quarter and flat compared with the third quarter of 2014, Eurostat said.

U.K. retail sales volume in November increased 1.7% from October and 5% from November 2015, the British Office for National Statistics said.

In terms of value, sales grew by 1.4% in November from the previous month and from the previous year. Online sales jumped 12.7% from a year ago, the ONS said.

In London trading, FTSE 100 index jumped 82 or 1.4% to 6,140.88 and in Frankfurt the DAX index advanced 321.32 or 3.1% to 10,788.63.

In Paris, CAC 40 index soared 102.34 or 2.2% to 4,728.88.

AstraZeneca Plc gained 13% to 4,470 pence after the U.K.-based biopharmaceutical company confirmed the reports for the acquisition of 55% of Acerta Pharma for $4 billion.

AstraZeneca will pay $2.5 billion initially and $1.5 billion after receiving the first U.S. regulatory approval for Acerta’s medicine for blood cancer, or the end of 2018 latest.

The company has an option to acquire the remaining 45% for $3 billion if the drug gets approval in the U.S.

The transaction is expected to close by the end of the first-quarter of 2016.

E.ON SE soared 5.6% to €8.78 after the German energy company agreed to acquire Italian commercial and industrial on-site energy service provider Heat & Power for undisclosed financial terms.

Separately, E.ON signed an agreement with Korean Samsung SDI to co-operate in the energy storage business. Both of the companies already run battery projects in US, Germany, UK and Czech Republic.

Halma Plc gained 0.4% to 858 pence after the U.K.-based safety products maker agreed to acquire Spanish Visiometrics and U.S.-based Visual Performance Diagnostics for €18 million from private shareholders and Atlas Capital.

In addition, Halma will pay up to €69 million, depending on the profit performance of Visiometrics over the next three years, and up to €40 million in royalties over the next five years.

London Stock Exchange Group Plc jumped 2.4% to 2,704 pence after the U.K. trading platform provider reported strong performance across each of its businesses for the first eleven months of the year.

On its primary markets, the equity capital raised was £40 billion. ForexClear clearing soared 19% to $974 billion but fixed income clearing was flat at €67 trillion.

The average daily U.K. equity volume was up 9% from the previous year, while the daily volume traded on the LSE’s Italian bourses increased by 7%.