European stocks plunged on Friday morning, ending the week on a subdued note, as the Euro Stoxx 50 index fell. Investors worried about the European Central Bank’s decision to stick with the ‘step-by-step’ plan to withdraw stimulus packages from the economy despite inflation soaring to unprecedented highs in the world. course of the last few months.
UK stocks, on the other hand, were more bullish, with the FTSE 100 index rising as the Bank of England decided to raise interest rates again, for the second time in a row at its meeting yesterday. Investors hope this will go a long way in curbing inflation in the UK in the near future.
Overnight in Asia, Hong Kong’s Hang Seng Index (.HK50) climbed, however, the US S&P 500 Index (.US500) fell.
What is interesting today: Aston Martin and Saudi Arabia-based energy giant Aramco have signed a partnership, aiming to win more championships. SSP Group has announced that Omicron has hit revenues harder than expected, however sales are gradually recovering as restrictions are lifted in the UK and Europe.
Why are European stocks down today?
The ECB is sticking to the “step by step” plan: The European Central Bank resisted pressure to take a faster approach to interest rate hikes and withdraw stimulus from the market.
- What does that mean: With the Bank of England raising interest rates for the second consecutive time and the US Federal Reserve also poised to raise rates in March, the ECB remains one of the most accommodative central banks. This is very concerning for investors at this stage, as inflation in the Eurozone has hit several records over the past few months. Concerns about the potential effects of a postponement of rate hikes are therefore aplenty and are also spreading to cause turbulence in equity markets.
Stock markets: highlights
- The FTSE 100 index (.UK100) rose 0.22% to 7545.4 points
- The Euro Stoxx 50 index (.EU50) fell 0.86% to 4105.5 points
- The German DAX index (.DE40) fell 1.16% to 15190.2 points
- The French CAC 40 index (FR40) lost 0.47% to 6972.7 points
- Leading sectors in the UK were energy and communications, while manufacturing and finance lagged
- US S&P 500 futures fell 0.11% to $4,464.0
- The CBOE Volatility Index, or VIX (.VIX), a measure of expected swings in US stocks, climbed to 25.76
- The US dollar index fell to $95.39
- The index of US 10-year bond yields rose slightly to 1.851%
Main buyers: United Kingdom and Europe
- The main UK stock gainers were BP, BT Group and Rentokil Initial
- BP shares rallied following the oil giant’s purchase of a 30% stake in Green Biofuels
- BT Group shares were won after the company entered into exclusive negotiations with Discovery over a sports joint venture
- Shares of Rentokil Initial climbed following the company’s upgrade to a ‘buy’ by Citi Group
- The best performing companies in Europe are TotalEnergies, BNP Paribas and Adyen BV Parts Sociales
- Shares of TotalEnergies edged higher after the company finalized a deal with Uganda to help develop the country’s crude reserves
- BNP Paribas shares appreciate following the bank’s 100% stake in Cofiloisirs
Main losers in equities: UK and Europe
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The difference between trading assets and CFDs
The main difference between trading CFDs and trading assets, such as commodities and stocks, is that you do not own the underlying asset when trading a CFD.
You can always profit if the market moves in your favor or suffer a loss if it moves against you. However, with traditional trading, you enter into a contract to exchange legal ownership of individual stocks or commodities for cash, and you own them until you sell them again.
CFDs are leveraged products, which means that you only have to deposit a percentage of the total value of the CFD transaction to open a position. But with traditional trading, you buy the assets for the full amount. In the UK there is no stamp duty on CFD trading, but there is when you buy shares, for example.
CFDs attract overnight costs to hold trades (unless you are using 1-1 leverage), which makes them more suitable for short-term trading opportunities. Stocks and commodities are more normally bought and held longer. You might also pay a commission or brokerage fee when buying and selling assets directly and you would need a place to store them securely.
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