By Callum Keown
European stocks tumbled on Tuesday as mounting global political risks sent investors rushing to safe havens.
The Stoxx 600 /zigman2/quotes/210599654/delayed XX:SXXP +2.48% drifted 0.7% lower, while the DAX /zigman2/quotes/210597999/delayed DX:DAX +3.36% fell 0.9% as German economic sentiment plunged along with bond yields.
The FTSE MIB /zigman2/quotes/210598024/delayed IT:I945 +2.82% continued to be weighed down by political turmoil in Italy as the senate prepares to meet on Tuesday to set a date for a no-confidence vote in the government.
What’s moving the markets?
Markets remained nervous over the fragile state of relations between the U.S. and China and the threat of further escalation of the trade war.
Continued protests in Hong Kong, political uncertainty in Argentina and Brexit fears formed an unpleasant cocktail for investors, who moved away from riskier assets.
Singapore downgraded its GDP growth forecast due to knock-on effects from the Sino-American trade war.
European stocks slid on Tuesday following weakness in Asia overnight and a disappointing close on Wall Street on Monday.
Traders took cover in safe haven assets as European bond yields fell to fresh lows, with the 10-year German bund hitting -0.62%, and gold climbed above $1,500 per ounce.
German economic sentiment tumbled in August, according to the closely-followed ZEW survey, well below expectations.
ZEW President Achim Wambach said conditions were likely to get worse for Europe’s largest economy.
He said: “The most recent escalation in the trade dispute between the U.S. and China, the risk of competitive devaluations, and the increased likelihood of a no-deal Brexit place additional pressure on the already weak economic growth.
“This will most likely put a further strain on the development of German exports and industrial production.”
Which stocks are active?
Henkel /zigman2/quotes/201298011/delayed XE:HEN3 +1.63% fell 6.8% after the German consumer goods giant cut its full-year outlook for sales and earnings due to a decline in key industries, including automotive and electronics. The Schwarzkopf shampoo maker also blamed a weak performance in its beauty unit.
Travel operator Tui /zigman2/quotes/207049334/delayed UK:TUI +6.13% rose 1.8% as the company stuck to its full-year guidance despite warning the grounding of Boeing 737 Max could cost it up to €300 million ($336 million). The firm posted a €103.9 million loss in its markets and airlines business in the third quarter, compared with a €37.2 million profit the previous year.