By Geoffrey Smith
Investing.com - Peugeot (PA:PEUP) is heading back to the U.S. after a gap of nearly 30 years - and the market doesn't like it.
Shares in the French carmaker are down 4.0% and are at the bottom of both the CAC 40 index in France and the Euro Stoxx 50, lagging a market which is correcting downwards after hitting its highest level in nearly five months on Monday. At 04.00 AM ET (0900 GMT), the Stoxx 600 index was down 0.3% at 371.14.
The market is worried that the group, which has gone from strength to strength under chief executive Carlos Tavares, is biting off more than it can chew. Launch costs will be high, competition fierce, the current business cycle in the U.S. is old and nobody really knows what vehicles will be wanted in tomorrow's 'mobility' market. And it's not the only launch Peugeot is planning: It also wants to break into the Indian market with its Citroen brand, and build out newly-acquired Opel in Russia.
But the company needs to diversify outside of Europe, where it sells more than 75% of its vehicles. The acquisition of GM's European operations has reinforced that geographical concentration - even if it has immediately restored profits to brands that had lost money constantly for 20 years. It expects the European market to stagnate.
On the other side of the channel, U.K. stocks are among the worst performers this morning, partly as a result of the Brexit paradox: news of a possible delay to Brexit has launched sterling higher, which depresses the accounting value of all the dollars that FTSE-listed miners, oil companies and drinks makers generate. The FTSE 100 is down 0.8%, and it's conspicuous that the better performers are those exposed less to global markets, such as retailers Next (LON:NXT)and Marks and Spencer (LON:MKS).
Elsewhere, Germany's Dax and Italy's FTSE MIB are both down 0.3%.