EUROPE MARKETS: European Stocks Slump As Merkel Comes Under Pressure In Germany
June 18 2018 - 5:14AM
Dow Jones News
By Sara Sjolin, MarketWatch
Heightening tensions between China and the U.S. also spooking
investors
European stock markets headed mostly lower on Monday, as Angela
Merkel's tenure as German Chancellor came under threat and the
trade conflict between the U.S. and China escalated.
What are markets doing?
The Stoxx Europe 600 index dropped 0.4% to 387.58, building on a
1% loss from Friday.
Germany's DAX 30 index fell 0.6% to 12,936.24, while France's
CAC 40 gave up 0.5% to 5,476.42.
The U.K.'s FTSE 100 managed to erase an opening loss and swing
back in positive territory, trading 0.1% higher at 7,639.35. The
turnaround came as oil prices trimmed losses and sent U.K.-listed
oil majors higher after reports the Organization of the Petroleum
Exporting Countries will raise output less than expected at a
meeting in Vienna later this week.
The euro fell to $1.1588 from $1.1609 late Friday in New
York.
What is driving the market?
Trade tensions remained in the spotlight after China announced
plans for retaliatory tariffs on U.S. goods worth $34 billion,
including soybeans, whiskey and electric cars. Beijing's move comes
after U.S. President Trump last week approved a first round of
levies on about $50 billion in Chinese products and reportedly was
drawing up a list for a second wave of tariffs against China.
Meanwhile, back in Europe, German Chancellor Angela Merkel's
fragile coalition was under pressure
(https://www.wsj.com/articles/germanys-merkel-reaches-out-to-eu-members-over-immigration-dispute-1529272608?mod=searchresults&page=1&pos=2)
over migrant issues, prompting increasing concerns that the
government could falter. Merkel's Bavarian allies, the Christian
Social Union, will reportedly decide on Monday whether to defy the
chancellor on her immigration policies, which the CSU believes are
too soft.
What are analysts saying?
"Angela Merkel's coalition is coming under increasing strain
over the migrant issue. Ms. Merkel is insisting that Germany abide
by a pan-European solution while her partners are pressing for a
German only policy response," said Boris Schlossberg, managing
director of FX strategy at BK Asset Management.
"The friction is so tense that markets are becoming genuinely
concerned that her government could fall which would have hugely
negative ramifications for [the] euro as Germany is the de-facto
anchor for the currency. The pair looks vulnerable to test 1.1500,
but could fall much further if the crisis in Germany spins out of
control," he added.
Stock movers
Shares of Indivior PLC (INDV.LN) rallied 5.3% after the U.K.
pharma company said it has been successful in temporarily blocking
(http://www.marketwatch.com/story/indivior-wins-temporary-block-on-suboxone-generic-2018-06-18)the
launch of a generic alternative to its Suboxone opioid disorder
medication through the courts.
Engie SA (ENGI.FR) dropped 2.4% after saying it expects an
adjustment
(http://www.marketwatch.com/story/engie-to-take-250-mln-hit-on-nuclear-revision-2018-06-18)
for three nuclear units to cause a 250 million-euro ($290.1
million) hit in its 2018 earnings.
Virgin Money Holdings PLC (VM.LN) lost 2.1% after the British
lender accepted a GBP1.7 billion all-share takeover offer
(http://www.marketwatch.com/story/virgin-money-accepts-cybgs-17-bln-all-share-bid-2018-06-18)
from fellow bank CYBG PLC (CYBG.LN) , the parent of British lenders
Clydesdale and Yorkshire Bank. Shares of CYBG were down 1%.
(END) Dow Jones Newswires
June 18, 2018 05:59 ET (09:59 GMT)
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