By Barbara Kollmeyer, MarketWatch
European stock markets fell Monday, tracking declines for global equities amid fears U.S.- China trade talks could be on the ropes after U.S. President Donald Trump threatened to lift tariffs on Chinese imports this week.
How are markets performing?
London markets were closed for a holiday, but pressure was felt by Europe stocks, with the Stoxx 600 index /zigman2/quotes/210599654/delayed XX:SXXP +1.84% dropping 1.4% to 385.02, after losing 0.2% last week.
Germany’s DAX /zigman2/quotes/210597999/delayed DX:DAX +1.64% slid 1.8% to 12,192.45, while France’s CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +1.57% fell 1.9% to 5,445.68. Italy’s FTSE MIB /zigman2/quotes/210598024/delayed IT:I945 +1.82% slid 1.9% to 21,352.74.
The euro /zigman2/quotes/210561242/realtime/sampled EURUSD -0.2324% was modestly lower at $1.1190 versus $1.1202 late Friday in New York.
What’s moving the markets?
Global markets got a shock when Trump on Sunday tweeted a threat to raise tariffs on $200 billion of Chinese goods by Friday of this week to 25% from 10%. Trade negotiations were set to resume this week between the two countries and last week U.S. officials had seemed hopeful a deal was imminent.
The development could mean China’s top trade negotiator, Vice-Premier Liu, could cancel his trip, though Bloomberg reported that the Chinese team still planned to go to Washington for those talks. However the spokesman cited but didn’t specify who would be going or if there was a change to the time frame.
The news was setting up a rough day for Wall Street stocks, while China equities tumbled /zigman2/quotes/210598127/delayed CN:SHCOMP -1.23% and oil prices fell, sending investors scurrying to perceived haven assets of gold and the Japanese yen. Europe’s trade sensitive auto industry was among those selling off, while major oil companies came under pressure on losses for crude prices.
Elsewhere, overall economic health in Europe looked softer after IHS Markit’s eurozone composite final purchasing managers index dipped to 51.5 in April from March’s 51.6. A reading of more than 50 indicates an expansion in activity.
What are analysts saying?
“Overall, a deal still seems more likely than not, though uncertainty has clearly returned and risk aversion may linger for a while. Trump wants to score a victory and wrap this up before the 2020 election race, while also boosting the stock market, so an agreement is still the most likely conclusion,” said Marios Hadjikyriacos, investment analyst at XM, in a note to clients.
“However, the U.S. president seems to be reverting back to his original methods of ratcheting up pressure first to generate negotiating leverage, implying that things could get worse before they get better from here,” said Hadjikyriacos.
What stocks are active?
Auto stocks, which are in the front lines of stress on the trade-deal front, were falling, with Germany’s Daimler AG /zigman2/quotes/205332368/delayed DE:DAI +0.06% down 2.8%, Volkswagen AG’s /zigman2/quotes/204309985/delayed DE:VOW3 +1.19% off 3.2% and France’s Renault SA /zigman2/quotes/200919924/delayed FR:RNO +1.37% sliding 3.6%.
Major oil companies fell alongside oil prices, with Total SA /zigman2/quotes/206172043/delayed FR:FP +1.20% down 2.6%, Royal Dutch Shell PLC /zigman2/quotes/201538663/delayed NL:RDSA +1.94% falling 1.4% and Repsol SA /zigman2/quotes/202941606/delayed ES:REP +2.78% dropped 1.4%.
Big bank names were also down, with Banco Santander SA /zigman2/quotes/205677933/delayed ES:SAN +0.78% /zigman2/quotes/202859081/composite SAN +0.57% off 1.8%, BNP Paribas SA /zigman2/quotes/206351084/delayed FR:BNP -0.28% down 1.2%, and ING Groep NV /zigman2/quotes/203351007/delayed NL:INGA +1.99% down 2.2%.
ArcelorMittal SA /zigman2/quotes/209487033/delayed NL:MT +3.39% tumbled nearly 4% after the steelmaker said it would temporarily cut European production by three million metric tons owing to weak demand in the region.