EUROPE MARKETS: Cocktail Of Global Risks Sends European Stocks Tumbling
13 August 2019 - 12:52PM
Dow Jones News
By Callum Keown
European stocks tumbled on Tuesday as mounting global political
risks sent investors rushing to safe havens.
The Stoxx 600 drifted 0.7% lower, while the DAX fell 0.9% as
German economic sentiment plunged along with bond yields.
The FTSE MIB continued to be weighed down by political turmoil
in Italy as the senate prepares to meet on Tuesday to set a date
for a no-confidence vote in the government.
What's moving the markets?
Markets remained nervous over the fragile state of relations
between the U.S. and China and the threat of further escalation of
the trade war.
Continued protests in Hong Kong, political uncertainty in
Argentina and Brexit fears formed an unpleasant cocktail for
investors, who moved away from riskier assets.
Singapore downgraded its GDP growth forecast due to knock-on
effects from the Sino-American trade war.
European stocks slid on Tuesday following weakness in Asia
overnight and a disappointing close on Wall Street on Monday.
Traders took cover in safe haven assets as European bond yields
fell to fresh lows, with the 10-year German bund hitting -0.62%,
and gold climbed above $1,500 per ounce.
German economic sentiment tumbled in August, according to the
closely-followed ZEW survey
(http://www.marketwatch.com/story/german-zew-falls-to-worst-level-in-more-than-seven-years-2019-08-13),
well below expectations.
ZEW President Achim Wambach said conditions were likely to get
worse for Europe's largest economy.
He said: "The most recent escalation in the trade dispute
between the U.S. and China, the risk of competitive devaluations,
and the increased likelihood of a no-deal Brexit place additional
pressure on the already weak economic growth.
"This will most likely put a further strain on the development
of German exports and industrial production."
Which stocks are active?
Henkel (HEN.XE) fell 6.8% after the German consumer goods giant
cut its full-year outlook for sales and earnings
(http://www.marketwatch.com/story/henkel-cuts-sales-view-as-profit-falls-2019-08-13)
due to a decline in key industries, including automotive and
electronics. The Schwarzkopf shampoo maker also blamed a weak
performance in its beauty unit.
Travel operator Tui rose 1.8% as the company stuck to its
full-year guidance despite warning the grounding of Boeing 737 Max
(http://www.marketwatch.com/story/tui-profit-drops-by-85-hit-by-737-max-grounding-2019-08-13)
could cost it up to EUR300 million ($336 million). The firm posted
a EUR103.9 million loss in its markets and airlines business in the
third quarter, compared with a EUR37.2 million profit the previous
year.
(END) Dow Jones Newswires
August 13, 2019 06:37 ET (10:37 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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