European stock markets finished down slightly Monday, as traders digested a flare-up in trade tensions between the U.S. and China as well as another round of earnings reports.
In the U.K., investors weighed up the latest Brexit developments after the country’s trade secretary said there’s a real risk Britain will leave the European Union without a deal on trade.
What are markets doing?
The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP -0.99% slipped 0.1% to end at 388.66, after swinging in and out of positive territory. The small loss on Monday followed a 0.7% rally on Friday, when tech shares tracked their U.S. counterparts higher after a well-received earnings report from Apple Inc. /zigman2/quotes/202934861/composite AAPL -0.32% .
France’s CAC 40 index /zigman2/quotes/210597958/delayed FR:PX1 -0.58% dipped less than 0.1% to close at 5,477.18 on Monday, while Germany’s DAX 30 index /zigman2/quotes/210597999/delayed DX:DAX -0.95% lost 0.1% to finish at 12,598.21. The U.K.’s FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX -0.53% edged up less than 0.1% to end at 7,663.78, helped by the pound’s drop after the trade official’s Brexit remarks.
The euro /zigman2/quotes/210561242/realtime/sampled EURUSD +0.1413% dipped to $1.1564, down a little from $1.1568 late Friday in New York.
What is driving the market?
The downbeat trading action came as worries about global trade tensions persisted, after U.S. President Donald Trump over the weekend tweeted that American tariffs are “ working far better than anyone ever anticipated .” That followed China’s threat on Friday to place tariffs on $60 billion of American goods if the White House goes ahead with its plans to impose new levies on Chinese products.
China’s Global Times newspaper said Beijing is ready to dig in for a “protracted war” with the U.S. over trade. Equity strategists have warned that the escalating trade fight could weigh on global economic growth.
In a sign that the continuing global trade dispute is weighing on corporate investments, German manufacturing orders plunged in June by 4%, data out on Monday showed.
Meanwhile, in the U.K., international trade secretary Liam Fox said in a Sunday Times interview over the weekend that there is a 60% chance that Britain will crash out of the European Union without a deal with the bloc.
What are strategists saying?
“Disappointing new orders data show tentative signs of trade tensions hitting the German economy, which doesn’t bode well for the industrial outlook in the second half of the year,” said Carsten Brzeski, chief German economist at ING, in a note.
“Before turning to the second half of the year, however, second quarter GDP will get more attention. While Eurostat already released a preliminary flash estimate for GDP growth in the entire eurozone in the second quarter, Germany has only today started to count hard data for the month June. It was definitely not a good start,” he added.
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Shares of IWG PLC /zigman2/quotes/207263311/delayed UK:IWG -0.56% sank 21% after the coworking-and-workspace company ended talks with potential suitors, saying it believes none of the interested parties can currently deliver a deal at a price its board could recommend.
Shares in Just Eat PLC declined 1.5% after the food-delivery company posted first-half results. It was a bittersweet period, as the company delivered a profit fall but raised 2018 revenue guidance, a Dow Jones Newswires report said.
Linde AG /zigman2/quotes/203890251/delayed DE:LIN -0.60% gave up 1.9% after the German industrial-gases company said Sunday that it and Praxair Inc. /zigman2/quotes/208000542/composite PX +1.82% may have to sell more assets than expected to get antitrust approval for their merger. That is seen as potentially jeopardizing the deal.