By Dave Morris
Europe stocks struggled for traction on Wednesday, as first quarter earnings reports helped offset some, but not all off the global trade tensions that have weighed on global markets this week.
How did markets perform?
The Stoxx 600 /zigman2/quotes/210599654/delayed XX:SXXP +1.65% dipped 0.2% to 382.2. It fell 1.4% Tuesday.
The U.K.’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +1.95% was off 0.3% to 7,242.37. That added to Tuesday’s loss of 1.6%
The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD -0.3142% sank 0.4% to $1.3007, on top of losing 0.3% Tuesday.
Italy’s FTSE MIB /zigman2/quotes/210598024/delayed IT:I945 +1.06% fell 0.4% to 21,122.5, after its 0.9% retreat on Tuesday.
France’s CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +0.40% was at 5,411, down 0.1% after Tuesday’s 1.6% fall.
Oil was unfazed by the news that Iran was seeking to break the terms of its nuclear deal. The West Texas Intermediate benchmark added to declines during the week, up 0.4% to $61.65 per barrel. Brent crude eased 0.1% to $69.78 per barrel.
What’s moving the markets?
In European indexes earnings appeared to grab the bulk of attention, rather than news about trade or oil.
Iran announced that it would stop implementing some aspects of its 2015 nuclear deal, citing frustrations with signatory countries’ failure to help them sell oil as well as the U.S.’s withdrawal from the agreement in 2018. But the oil price didn’t react dramatically, nor did oil producers’ stocks.
U.S. negotiators had been touting the progress of trade talks with China for weeks, when U.S. President Donald Trump’s weekend tweet announcing fresh punitive measures sharply reset investors’ expectations. Confirmation from U.S. officials that it wasn’t mere bluster firmly sank in Tuesday, when a trickle of losses turned into a selloff in U.S. markets. The S&P 500 /zigman2/quotes/210599714/realtime SPX -1.60% fell 1.7%, the largest loss since March 22, and stock futures indicated a struggle for Wednesday as well.
“We are starting to see the market price in the U.S.-China trade dispute as both an immediate and long-term risk factor, rather than an issue that was on the brink of being resolved. With this in mind, the S&P looks mispriced close to all-time highs,” said Jasper Lawler, head of research at London Capital Group, said:
In Germany, industrial production figures for March rose unexpectedly, coming in at 0.5% month over month versus -0.5% expected. Chinese data was less sunny, with exports for April sinking 2.7% year over year versus expectations of a 2.3% rise.
Which stocks are active?
German industrial conglomerate Siemens AG /zigman2/quotes/200873563/delayed DE:SIE +1.53% saw a spike of 5% in its share price following a better-than-expected second quarter report, as well as announcing that it planned to spin off its power and gas unit. Its core industrial business saw adjusted earnings before interest, tax and amortization rise roughly 7% to €2.4 billion. The company also affirmed its 2019 guidance.
Danish facilities company ISS A/S /zigman2/quotes/200100701/delayed DK:ISS +3.25% shares were up 4.4% after the company delivered an upbeat first quarter report. Revenue rose 4.9% year over year on strong organic growth, with new contracts in Denmark and expanded or renewed agreements elsewhere.
Shares in U.K. TV broadcaster ITV PLC /zigman2/quotes/205378065/delayed UK:ITV +5.84% slid 5% as economic uncertainty drove a decline in advertising of 7%, to £417 million. The company behind shows such as Love Island said Brexit is weighing on ad spending, and costs related to its streaming service project with the BBC, BritBox, which is expected to launch in the fall.
Direct Line Insurance Group PLC /zigman2/quotes/201952264/delayed UK:DLG +6.82% shares were down 1.8% following the company’s lackluster first quarter earnings report. The insurer reported gross written premiums for the quarter down 2.1% year over year, citing competitive pressure on automotive insurance. It reiterated its commitment to containing its costs.
Russ Mould, investment director at AJ Bell, cited a wealth of problems weighing on the normally staid insurance industry, adding that “The sector is also under regulatory pressure over effective penalties for customer loyalty. There is now pressure on the industry—as well as other sectors like broadband—to stop giving the best prices only to new customers.”