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Nov. 21, 2019, 5:37 a.m. EST

European stocks dip on China concerns

Royal Mail slumps as U.K. arm struggles

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By Steve Goldstein, MarketWatch


Reuters
A Royal Mail postal worker stands in the yard of a sorting office in Altrincham, Britain.

European stocks dropped on Thursday on concern the U.S. and China won’t imminently strike a trade deal.

The Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP +0.22%  weakened 0.38% to 402.28.

The German DAX /zigman2/quotes/210597999/delayed DX:DAX +0.58%  fell 0.18% to 13134.55, the French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +0.22%  dropped 0.28% to 5877.71 and the U.K. FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.03%  dropped 0.46% to 7228.81.

Concerns that the U.S. and China might not finish a so-called phase one trade deal this year, as well as the passage in the U.S. House of Representatives of a Hong Kong democracy bill, weighed on sentiment.

China’s vice premier, Liu He, reportedly said he’s “cautiously optimistic” about getting to a preliminary phase 1 trade pact with the U.S. but also said he was confused by U.S. demands. He reportedly invited his U.S. counterparts to Beijing for trade talks, according to The Wall Street Journal.

Even with losses for consecutive days, the Stoxx 600 is up about 19% this year. That makes equity strategists at Société Générale uncomfortable. “At a time when the U.S. economy is at the end of the cycle and central banks have already used up a lot of their ammunition, most notably the European Central Bank, the European equity market, in our view, offers an asymmetric risk/reward profile, with limited upside potential for 2020,” the financial services company said in a research report.

Its Stoxx 600 target for the fourth quarter of 2020 is 380.

Of stocks on the move, British American Tobacco /zigman2/quotes/209116881/delayed UK:BATS +0.08% rose 3.2% and Imperial Brands /zigman2/quotes/208789104/delayed UK:IMB -0.45%  edged higher as the U.S. Food and Drug Administration delayed a plan to cut nicotine levels to minimally or nonaddictive levels.

Thyssenkrupp /zigman2/quotes/207409543/delayed DE:TKA +0.26%  fell 10.5% as the multinational conglomerate reported a 30% decline in adjusted earnings before interest and tax in the fourth quarter, and said next year’s adjusted earnings before interest and taxes will be flat.

Royal Mail /zigman2/quotes/204213037/delayed UK:RMG +0.53%  fell 16.6% as the privatized postal delivery firm said its transformation plan is “behind schedule,” requiring more investment because of what it called the “industrial relations environment” as well as the general election and Christmas. Its U.K. parcels, international and letters division is forecast to break even or lose money in fiscal 2021. “This will get worse before it gets better,” said analysts at Bernstein.

Royal Mail’s General Logistics Systems delivery service unit, however, reported a 17% increase in adjusted operating profit.

/zigman2/quotes/210599654/delayed
XX : STOXX
406.22
+0.88 +0.22%
Volume: 0.00
Dec. 11, 2019 5:50p
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/zigman2/quotes/210597999/delayed
DAX
DX : Xetra Indices
13,146.74
+76.02 +0.58%
Volume: 69,220
Dec. 11, 2019 6:30p
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/zigman2/quotes/210597958/delayed
FR : France: Euronext Paris
5,860.88
+12.85 +0.22%
Volume: 62,940
Dec. 11, 2019 6:05p
loading...
/zigman2/quotes/210598409/delayed
UK : FTSE UK
7,216.25
+2.49 +0.03%
Volume: 807,982
Dec. 11, 2019 4:59p
loading...
/zigman2/quotes/209116881/delayed
UK : U.K.: London
2,996.50 p
+2.50 +0.08%
Volume: 4.03M
Dec. 11, 2019 4:35p
P/E Ratio
11.16
Dividend Yield
6.77%
Market Cap
£68.45 billion
Rev. per Employee
N/A
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/zigman2/quotes/208789104/delayed
UK : U.K.: London
1,668.20 p
-7.60 -0.45%
Volume: 4.32M
Dec. 11, 2019 4:35p
P/E Ratio
15.78
Dividend Yield
12.38%
Market Cap
£15.86 billion
Rev. per Employee
N/A
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/zigman2/quotes/207409543/delayed
DE : Germany: Frankfurt
11.41
+0.03 +0.26%
Volume: 6,495
Dec. 11, 2019 7:28p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
N/A
Rev. per Employee
€227,908
loading...
/zigman2/quotes/204213037/delayed
UK : U.K.: London
228.60 p
+1.20 +0.53%
Volume: 5.90M
Dec. 11, 2019 4:35p
P/E Ratio
7.08
Dividend Yield
6.56%
Market Cap
£2.27 billion
Rev. per Employee
£63,484
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Steve Goldstein is MarketWatch markets editor for Europe. Follow him on Twitter: @MKTWgoldstein.

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