Bulletin
Investor Alert

Europe Markets Archives | Email alerts

Aug. 2, 2018, 1:20 p.m. EDT

Europe’s stock benchmarks log second straight loss as trade worries weigh

Bank of England hikes rates as expected in unanimous decision

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    STOXX Europe 600 Index (SXXP)
  • X
    DAX (DAX)
  • X
    FTSE 100 Index (UKX)

or Cancel Already have a watchlist? Log In

By Karen Friar, MarketWatch


Getty Images
BMW earnings were a disappointment.

European stocks finished the session firmly lower Thursday as trade tensions between the U.S. and China appeared to be experiencing fresh escalation, with Germany’s main benchmark dragged down by concerns about the impact of tariff action. Disappointing earnings updates from Siemens AG and BMW AG added to the downbeat mood, and the Bank of England lifted U.K. borrowing costs, as expected.

How markets are moving

The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP +1.58% shed 0.8% to close at 386.64, logging its second consecutive loss. On Wednesday, the pan-European index fell 0.8%, after ending July on a up note.

Germany’s DAX 30 index /zigman2/quotes/210597999/delayed DX:DAX +1.64% fell 1.5% to end at 12,546.33 amid disappointing financial updates from key names. The index also booked its second straight decline.

The U.K.’s FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX +2.09% tumbled 1% to 7,575.93, with losses for the benchmark gathering steam after the Bank of England raised its bank rate by 25 basis points, in an unexpectedly unanimous decision by policy makers.The British stock benchmark has closed with a loss for the past two sessions.

Italy’s FTSE MIB /zigman2/quotes/210598024/delayed IT:I945 +1.55% ended down 1.7% at 21,414.72, while Spain’s IBEX 35 /zigman2/quotes/210597995/delayed XX:IBEX +2.06% fell 1% to 9,698.20. France’s CAC 40 index /zigman2/quotes/210597958/delayed FR:PX1 +1.49% declined by 0.7% to 5,460.98.

The euro /zigman2/quotes/210561242/realtime/sampled EURUSD +0.1326% fetched $1.1617, down 0.4% against the U.S. dollar, from $1.1662 late Wednesday in New York.

What’s driving markets

Trade tensions between U.S. and China returned to the fore after President Donald Trump’s administration threatened late Wednesday to raise the proposed tariffs on $200 billion of Chinese goods to 25%, more than double the 10% originally laid out.

Concerns about the possible hit to exporters helped to pressure lower Germany’s main benchmark, the DAX.

The nine-member BOE policy-setting committee all voted in favor of a quarter of a percentage point rate increase, the second hike for the central bank in roughly a decade. In its statement, the BOE said “the near-term outlook has evolved broadly in line with the MPC’s expectations.” The BOE added that recent retrenchments in economic output were temporary and appeared to emphasize that the Monetary Policy Committee led by Gov. Mark Carney may need to do more to prevent the economy from overheating, although it “continues to recognize that the economic outlook could be influenced significantly by the response of households, businesses and financial markets to developments related to the process of EU withdrawal,” otherwise known as Brexit.

Check out: What to watch in the Bank of England’s ”Super Thursday”

What strategists are saying

“The Monetary Policy Committee (MPC)’s decision to hike interest rates from 0.50% to 0.75% today comes as no great surprise—it had been over 90% priced into markets ahead of the meeting. However, the minutes and Inflation Report lend some support to our view that interest rates will rise by more than markets currently expect over the next few years,” wrote Ruth Gregory, senior U.K. economist at Capital Economics in a Thursday research note immediately after the decision.

“Trade war fears have come back to bite market sentiment, as fears over a new low in U.S.-Chinese trade relations has driven a new bout of selling across global indices. European markets have followed their Asian counterparts lower, and with U.S. futures pointing towards a similarly dour open, there is reason to believe that we will see these trade concerns cloud trading for the rest of the week,” Joshua Mahony, market analyst at IG, said in a note.

Stock movers

Shares of Siemens /zigman2/quotes/200873563/delayed DE:SIE +1.56% lost 4.7% after the German conglomerate’s profit fell in the third quarter, hit by underperformance at its oil-and-gas unit, and by a higher tax rate.

Among the other decliners in Frankfurt were BMW shares /zigman2/quotes/209548467/delayed DE:BMW +1.71% which edged 0.4% lower, and those for Hugo Boss AG /zigman2/quotes/205761551/delayed DE:BOSS +1.12% slumped by 7.8% after financial updates.

KAZ Minerals PLC shares /zigman2/quotes/208098927/delayed UK:KAZ +3.50% led the region’s decliners, plunging by 28% on the mining company will buy the Baimskaya copper project in Russia. Altice Europe NV /zigman2/quotes/203942774/delayed NL:ATC +0.73% fell 16.3% after the telecom operator said acquisition costs will limit cash flow in France.

As for advancers, Metro AG /zigman2/quotes/207598928/delayed DE:B4B +1.18% jumped by 9.7% after the German food wholesaler said it expects earnings and sales to rise in fiscal 2018. Rolls-Royce Holdingsadded 7.1% after the aircraft-engine maker boosted its full-year outlook.

/zigman2/quotes/210599654/delayed
XX : STOXX
371.21
+5.78 +1.58%
Volume: 0.00
July 6, 2020 11:03p
loading...
/zigman2/quotes/210597999/delayed
DAX
DX : Xetra Indices
12,733.45
+205.27 +1.64%
Volume: 78,193
July 6, 2020 6:30p
loading...
/zigman2/quotes/210598409/delayed
UK : FTSE UK
6,285.94
+128.64 +2.09%
Volume: 681,521
July 6, 2020 4:59p
loading...
/zigman2/quotes/210598024/delayed
IT : Borsa Italiana
20,031.86
+305.21 +1.55%
Volume: 0.00
July 6, 2020 5:36p
loading...
/zigman2/quotes/210597995/delayed
XX : Spain: Madrid
7,556.20
+152.70 +2.06%
Volume: 253.51M
July 6, 2020 5:38p
loading...
/zigman2/quotes/210597958/delayed
FR : France: Euronext Paris
5,081.51
+74.37 +1.49%
Volume: 88,535
July 6, 2020 6:05p
loading...
/zigman2/quotes/210561242/realtime/sampled
US : Tullett Prebon
1.1325
+0.0015 +0.1326%
Volume: 0.0000
July 6, 2020 8:23p
loading...
/zigman2/quotes/200873563/delayed
DE : Germany: Frankfurt
107.98
+1.66 +1.56%
Volume: 8,450
July 6, 2020 8:58p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
N/A
Rev. per Employee
€219,884
loading...
/zigman2/quotes/209548467/delayed
DE : Germany: Frankfurt
58.32
+0.98 +1.71%
Volume: 9,038
July 6, 2020 8:58p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
N/A
Rev. per Employee
€723,779
loading...
/zigman2/quotes/205761551/delayed
DE : Germany: Frankfurt
27.04
+0.30 +1.12%
Volume: 582.00
July 6, 2020 8:59p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
N/A
Rev. per Employee
€190,396
loading...
/zigman2/quotes/208098927/delayed
UK : U.K.: London
502.60 p
+17.00 +3.50%
Volume: 679,734
July 6, 2020 4:35p
P/E Ratio
5.49
Dividend Yield
1.59%
Market Cap
£2.29 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/203942774/delayed
NL : Netherlands: Euronext Amsterdam
3.84
+0.03 +0.73%
Volume: 4.01M
July 6, 2020 5:35p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
€4.63 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/207598928/delayed
DE : Germany: Frankfurt
8.72
+0.10 +1.18%
Volume: 5,863
July 6, 2020 8:59p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
N/A
Rev. per Employee
€187,155
loading...

Karen Friar is bureau chief for MarketWatch in London. You can follow her on Twitter @Karen_Friar.

This Story has 0 Comments
Be the first to comment
More News In
Markets

Story Conversation

Commenting FAQs »

Partner Center

World News from MarketWatch

Link to MarketWatch's Slice.