EUROPE MARKETS: Auto Makers, Italian Stocks Lead European Shares Lower
June 21 2018 - 6:14AM
Dow Jones News
By Carla Mozee, MarketWatch
European stocks fell Thursday, facing their fourth loss in five
sessions, with auto shares under pressure and Italian shares
flipping down following developments surrounding the country's
coalition government.
How markets are performing
The Stoxx Europe 600 Index fell 0.2% to 383.44, with the utility
and financial sectors losing the most. The health care and consumer
services sector, however, topped advancers. The index on Wednesday
rose 0.3%
(http://www.marketwatch.com/story/european-stocks-stage-recovery-but-us-china-trade-tensions-remain-2018-06-20),
the first rise after three straight losses.
Italy's FTSE MIB was faring the worst, swinging lower to fall by
1.1% to 21,864.29. Germany's DAX 30 index dropped 0.8% to
12,589.21.
France's CAC 40 index declined 0.4% to 5,353.32, and Germany's
DAX 30 index fell 0.8% to 12,590.73.
Spain's IBEX 35 was down 0.8% to 9,712.50, and the U.K.'s FTSE
100 held to a 0.1% rise at 7,631.10.
The euro fell to $1.1523, from $1.1577 late Wednesday in New
York. Against the pound, the shared currency bought 0.8788 pence,
on par with Wednesday's level.
What's driving markets
Most European bourses had logged gains when trading got
underway, indicating markets were still recovering from Tuesday's
slide in global equities. Stocks were rattled by an escalation in
the trade fight between the U.S. and China, the world's two largest
economies.
Read:China can't match Trump in a tariff fight, but it does have
other weapons
(http://www.marketwatch.com/story/china-cant-match-trump-in-a-tariff-fight-but-it-does-have-other-weapons-2018-06-19)
But Germany's DAX 30 benchmark wasn't able to gain much traction
on Thursday, with shares of auto makers falling. Daimler AG late
Wednesday unexpectedly issued a profit warning
(https://www.wsj.com/articles/daimler-issues-profit-warning-as-chinese-tariffs-hit-u-s-built-suvs-1529530019?mod=mktw),
saying it will be hurt by Chinese retaliatory import duties on
vehicles built in the U.S. Meanwhile, Daimler, BMW AG and
Volkswagen AG are supportive of a call to abolish EU-U.S. tariffs
for imported cars
(https://www.wsj.com/articles/germanys-largest-auto-makers-back-abolition-of-eu-u-s-car-import-tariffs-1529492027?mod=mktw),
a bid to help shield the industry from a brewing trade war.
Italian stocks, meanwhile, fell into the red following reports
that two euroskeptic lawmakers from Italy's League party -- Alberto
Bagnai and Claudio Borghi -- have been named as the head of the
Senate's finance committee and president of the House's budget and
finance committee, respectively. Italian bond prices dropped
following the news, sending the yield on Italy's 2-year up by 17
basis points to 0.73%, according to Tradeweb. When prices fall,
debt yields rise.
The antiestablishment League and the 5 Star Movement parties
have together been running Italy's government since early June.
In London, the Bank of England will release its latest monetary
policy decision at 12 p.m. London time, or 7 a.m. Eastern Time. The
central bank is expected to hold its key interest rate at 0.5%. It
has been at that level since November, when policy makers lifted
the rate for the first time in a decade.
What strategists are saying
"Early gains across European markets are rapidly slipping away
... indicating that markets are still not entirely convinced that
trade wars have disappeared below the horizon. Outside of the U.S.
tech sector, which seems impervious to all worries, equities have
been broadly unable to hold on to their gains this week," said
Chris Beauchamp, chief market analyst at IG, in a note.
"[I]nvestors apparently [are] showing little desire to hold on to
risk assets while the macro backdrop seems so uncertain for the
time being."
Stock movers
Shares of car makers struggled, Daimler AG (DAI.XE) tumbling
4.3% to trade at prices not seen in nearly two years. Volkswagen AG
(VOW.XE) dropped 2.8%, BMW AG (BMW.XE) lost 2.9%. In Milan, shares
of Fiat Chrysler Automobiles NV (FCA.MI) were off 2.9%.
Also in Milan, Italian bank stocks were knocked down, with
UniCredit SA (UCG.MI) lower by 1.8%. Banco BPM SpA (BAMI.MI) shed
1.7% and Unione di Banche Italiane SpA (UBI.MI) dropped 1.9%.
Dixons Carphone PLC shares (DC.LN) rose 2.9% as the electrical
goods retailer posted fiscal year 2018 adjusted pretax profit in
line with the company's expectations
(http://www.marketwatch.com/story/dixons-carphone-profit-meets-revised-guidance-2018-06-21).
Shire PLC (SHPG) added 2.2% after the U.S. Food and Drug
Administration approved the drug maker's Cinryze hereditary
angioedema treatment to be made available for children aged six
years and older.
(END) Dow Jones Newswires
June 21, 2018 06:59 ET (10:59 GMT)
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