Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Europe's banks and industrials stocks sink as trade dispute deepens

Stock Markets Jun 25, 2018 09:43
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. The DAX (German stock index) logo is seen at the stock exchange in Frankfurt

By Helen Reid

LONDON (Reuters) - The latest episode in a trade dispute between the United States and other major economies sent European shares further into a funk on Monday with benchmarks down 0.8 to 1.2 percent and autos, basic resources and tech stocks the worst hurt.

A report that U.S. President Donald Trump plans to bar many Chinese companies from investing in U.S. technology firms and block more tech exports to Beijing hit Asian stocks overnight and dented early European trading.

Europe's tech sector (SX8P), which is mainly composed of hardware firms more sensitive to trade barriers, fell 1.2 percent on the news which could herald higher costs for companies.

Chipmakers BE Semiconductor (AS:BESI), Siltronic (DE:WAFGn), Infineon (DE:IFXGn), STMicro (MI:STM) and ASML (AS:ASML) were the biggest fallers, down 2.6 to 3.6 percent, while heavyweight software firms SAP and Micro Focus also dropped.

The autos sector (SXAP), a key target for Trump who said on Friday he aimed to hike tariffs on EU car imports by 20 percent, was the worst hit. It fell 1.4 percent, set for its seventh straight day of losses.

Analysts have downgraded their expectations for global autos stocks earnings worldwide as the trade war deepened over the past weeks.

Bank stocks (SX7P), highly sensitive to economic turmoil, were the worst-performing with Commerzbank (DE:CBKG) bottom of the DAX while HSBC (L:HSBA), Santander (MC:SAN) and BNP Paribas (PA:BNPP) led Europe-wide falls.

Overall, the pan-European STOXX 600 (STOXX) declined 0.7 percent while Germany's exporter- and autos-heavy index fell 0.9 percent. An Ifo survey reading showing that Germany's business morale fell in June added extra pressure on the DAX.

Overall investors have grown more risk-averse due to increasing tensions over trade, driving some to reconsider their pro-cyclical positioning.

"We recommend buying into trade-newsflow-driven market weakness as the stronger growth is what should ultimately prevail," said JP Morgan equity strategist Mislav Matejka.

He added however that further trade war escalation could jeopardise his positive position on the DAX, on cyclicals and exporters.

Industrials, which need unfettered access to markets, were also selling off. Airbus (PA:AIR), ABB (S:ABBN) and Siemens (DE:SIEGn) were among biggest drags on the STOXX.

Italian cable maker Prysmian (MI:PRY) fell 4.3 percent, the biggest loser on the STOXX, at the open after it cut its guidance due to additional expected costs related to issues with its UK WesternLink undersea cable project.

Among stand-out gainers, Danish medical equipment maker Ambu (CO:AMBUb) jumped 6.5 percent to the top of the STOXX after JP Morgan started coverage of it with an "overweight" rating.

Telenet (BR:TNET) also gained 5 percent after starting a 300 million euro share buyback programme.

British mid-cap workspace group IWG (L:IWG) rose 5.2 percent after confirming it received a possible cash offer from private equity firm Terra Firma and is evaluating it.

In small-cap UK stocks, Britain's biggest real estate firm Countrywide (L:CWD) sank 23.4 percent after a profit warning, the latest in a host of UK companies to signal results would be hit by adverse market conditions.

Europe's banks and industrials stocks sink as trade dispute deepens
 

Related Articles

Elon Musk says he is buying Manchester United
Elon Musk says he is buying Manchester United By Reuters - Aug 17, 2022 2

(Reuters) -Elon Musk, the world's richest person, on Tuesday tweeted that he was buying football club Manchester United Plc, without offering any details. Musk has a history of...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email