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July 18, 2019, 6:14 a.m. EDT

European markets dragged down as U.S.-China trade talks hit Huawei hurdle

By Callum Keown


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Trade talks between the U.S. and China have reportedly stalled over Huawei (Photo by Kevin Frayer/Getty Images)

European markets were dragged down on Thursday as trade talks between the U.S. and China ground to a halt over Huawei.

The DAX (XEX:DX:DAX)   was the worst performing index, falling 0.8% after Germany’s most valuable company SAP (FRA:DE:SAP)   dropped 6% as the trade war hit earnings.

The Stoxx 600 (STOXX:XX:SXXP)   slid 0.4%, while the CAC (PAR:FR:PX1)   lost 0.5% on a difficult morning for European stocks.

What’s moving the markets?

Trade talks between the U.S. and China have stalled as the Trump administration weighs up what to do about Huawei, The Wall Street Journal reported.

Beijing has demanded the U.S. ease restrictions on the Chinese telecommunications giant but U.S. officials are undecided.

Wall Street lost further ground on Wednesday after Netflix (NAS:NFLX)   reported a drop in subscribers and IBM (NYS:IBM)   also posted a revenue slide.

The negative sentiment spilled over into Europe on Thursday sending stocks spiralling down.

Speaking to MarketWatch, Connor Campbell, Spreadex analyst said: “The European markets were on a short leash led by the U.S. on Thursday.

“Reports that the US-China trade talks have hit a Huawei-wall cast a red cloud over the likes of the DAX and FTSE, the fear being that it wouldn’t take much for the fragile truce between the superpowers to unravel — especially with Donald Trump once again talking up tariffs on Chinese goods.”

Which stocks are active?

German software giant SAP (FRA:DE:SAP)   blamed global trade tensions as its second quarter profits missed expectations, sending shares down 5.7%

EasyJet (LON:UK:EZJ)   shares climbed 3.1% after the low-cost airline reported an 11% sales jump to £1.76bn in the third quarter, led by a spike in late bookings for the summer and a strong Easter performance.

Swiss pharma company Novartis (SWX:CH:NOVN)   rose 5% after raising its full-year sales and income guidance following strong second quarter sales. The drug giant cited innovative medicine sales and rising international demand for its Sandoz generic and biosimilar unit.

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