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European Stocks Weaken on Growth Concerns; Morrisons Looks at Auction Route

Stock MarketsSep 08, 2021 09:02
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By Peter Nurse - European stock markets traded sharply lower Wednesday, as investors fretted that the resurgence of Covid cases would result in slowing growth, particularly in the U.S., the main global economic driver.

At 3:40 AM ET (0840 GMT), the DAX in Germany traded 1.2% lower, the CAC 40 in France fell 1.1% and the U.K.’s FTSE 100 dropped 0.8%.

The declines in Europe followed volatile trading on Wall Street Tuesday, as the holiday-shortened week started with the blue-chip Dow Jones Industrial Average falling over 260 points, or 0.8%.

Worries of slowing growth, exacerbated by the disappointing August jobs report just as the Federal Reserve considers pulling back its bond-buying program, have prompted a more risk-averse mood.

In European corporate news, WM Morrison (LON:MRW) stock rose 0.5% after the British supermarket group confirmed earlier Wednesday that it is in talks with its two suitors and the U.K. Takeover Panel over the potential for an auction to settle its future ownership.

The supermarket chain, the fourth largest in the U.K., agreed a 7 billion pound ($9.6 billion) offer from U.S. private equity firm Clayton, Dubilier & Rice last month, but a rival consortium led by Softbank-owned Fortress Investment is still thought to be interested.

Additionally, Sanofi (PA:SASY) (NASDAQ:SNY) stock fell 1.5% after the French drugmaker announced plans to buy U.S. biopharmaceutical company Kadmon (NASDAQ:KDMN) in a $1.9 billion deal.

Halfords (LON:HFD) stock fell 3.4%, with Britain's largest cycling retailer stating that supply chain issues were dragging on its business, even as it stuck to its full-year guidance.

Elsewhere, Siemens Gamesa (MC:SGREN) stock fell 5.3% to its lowest level in a month after JPMorgan (NYSE:JPM) cut its recommendation on the wind turbine maker to neutral from outperform. Chief executive Andreas Nauen had said last week the company would exit certain markets, such as onshore generation in China, and also said it would have to raise its prices by up to 5% to offset higher input costs.

The European data slate is relatively empty Wednesday, and most attention will be on Thursday’s European Central Bank meeting, with the governing council members potentially discussing a reduction in its asset purchasing program. 

"There is the possibility that we may be able to normalize monetary policy sooner than most financial market experts expect," ECB policy maker, and well-known hawk, Robert Holzmann said in a magazine article Wednesday.

Crude prices stabilized on Wednesday after recent losses, with attention turning to the U.S. market as producers in the Gulf of Mexico struggle to restart operations in the wake of Hurricane Ida.

Over a week after the hurricane made landfall, more than three-quarters of U.S. Gulf production remains offline. The inventory data from the American Petroleum Institute later Wednesday and the U.S. Energy Information Administration on Thursday will be studied closely, as traders look for a more complete picture of the storm's impact on crude production and refinery output.

By 3:40 AM ET, U.S. crude futures traded 0.7% higher at $68.84 a barrel, while the Brent contract rose 0.6% to $72.10. 

Additionally, gold futures rose 0.2% to $1,802.65/oz, while EUR/USD traded 0.1% higher at 1.1844.


European Stocks Weaken on Growth Concerns; Morrisons Looks at Auction Route

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