By Carla Mozee, MarketWatch
Ryanair warns of summer pain from pilot, cabin crew strikes
European stocks ended the day lower and marked a third straight
loss on Monday, as shares of Fiat Chrysler Automobiles and others
came under pressure after the sudden departure of longtime chief
Sergio Marchionne, while investors juggled a new round of earnings
reports.
Sentiment also appeared dampened by an assessment on the impact
of trade disputes on global economic growth by officials from the
Group of 20 who met in Argentina over the weekend.
How markets moved
On national indexes, Italy's FTSE MIB fell 0.9% to end at
21,605.21, with Fiat Chrysler and Ferrari NV among the components
hit after Marchionne stepped down from his duties.
France's CAC 40 closed 0.4% lower at 5,378.25, and the U.K.'s
FTSE 100 index ended down 0.3% at 7,655.79. Germany's DAX 30 index
slipped 0.1% to close at 12,547.39. In Madrid, the IBEX 35 ended
1.3 points higher at 9,726.10. UBS on Monday said it's now
recommending investors add long exposure to the IBEX.
The broader Stoxx Europe 600 index fell 0.2% to close at 384.88,
with a third consecutive decline led by the tech and consumer goods
groups. The telecom, financial and oil and gas sectors, however,
ended higher. The index on Friday fell 0.2%
(http://www.marketwatch.com/story/european-stocks-fall-as-trump-threatens-china-with-tariffs-on-all-500-billion-in-goods-to-us-2018-07-20),
but ended last week with a third consecutive weekly gain.
The euro traded at $1.1707, pulling back from $1.1722 late
Friday in New York.
What's drove markets
Among Monday's decliners on the Stoxx 600 were shares of
companies who lost auto industry legend Sergio Marchionne as a
leader, as Marchionne is being treated in a Zurich hospital for
health complications after shoulder surgery.
Marchionne served as chairman and chief executive at Ferrari and
Fiat Chrysler, chairman of industrial and vehicle equipment maker
CNH Industrial, and as vice chairman of Exor, whose shareholdings
include Fiat, Ferrari and CNH.
"Though Marchionne was due to retire at the end of the year, the
development is unexpected. While investors do not like negative
surprises or uncertainty, we don't see the change in captain
altering the course of the ship at [Fiat Chrysler]," as Mike
Manley, Marchionne's successor, "is an extremely experienced auto
exec," said Evercore ISI analyst George Galliers in Sunday
note.
Ferrarri named Louis Camilleri as its new CEO. "Ferrari was
increasingly tuned to perfection by Marchionne, and it has to be
seen whether this can remain so without him," wrote Galliers." We
do not see Camilleri's lack of automotive experience as an issue,
but Ferrari is and always has been a finely balanced machine with
the various stakeholders having very strong views on what the
company is."
Meanwhile, finance ministers and central bankers of the G-20
group of countries ended their meeting in Buenos Aires on Sunday
warning "heightened trade and geopolitical tensions pose as
downside risks for global economic growth, which at this time
"remains robust," they said in a communique.
U.S. Treasury Secretary Steven Mnuchin told reporters in Buenos
Aires that the European Union, China, and Japan must remove tariffs
and subsidies before the U.S. discusses trade agreements with those
regions.
Mnuchin also said "it's definitely a realistic possibility" that
U.S. President Donald Trump will follow through on a threat to put
tariffs on all $500 billion worth of Chinese imports into the
U.S.
Read:G-20 makes little headway on settling global trade tensions
sparked by U.S. tariffs
(http://www.marketwatch.com/story/g-20-makes-little-headway-on-settling-global-trade-tensions-sparked-by-us-tariffs-2018-07-23)
What are strategists saying?
"Global markets continue their malaise, as trade tensions weigh
on sentiment amid fears that global growth will slow. With no major
catalysts to drive the market higher, the risks are on the downside
and the danger is that equity markets will drift lower. Earnings
will allow individual stocks or even sectors to out or
underperform, but the broader indices are likely to find it more
difficult to gain traction," said Rebecca O'Keeffe, head of
investment at Interactive Investor, in a note.
"Trade issues are likely to stay in focus as an EU trade mission
is due to arrive in Washington mid-week. Any signs that Trump is
willing to back down from his hard-line stance with the EU could
quickly boost sentiment leaving traders the opportunity to focus on
the European Central Bank meeting and U.S. GDP release at the end
of the week," said Jasper Lawler, head of research at London
Capital Group, wrote in a note.
The ECB meeting is scheduled for Thursday.
Stocks in focus
Following Marchionne's departure, shares of Ferrari NV lost
4.9%, Fiat Chrysler Automobiles (FCA.MI) closed down 1.5%, Exor NV
ended 3.3% lower, and CNH Industrial NV shed 1.3%.
Ryanair Holdings PLC (RYAAY) closed down 6.7% after the airline
posted a 20% decline in first-quarter profit to EUR319 million as
the company said profit was hurt in part by higher oil prices and
pilot strikes
(http://www.marketwatch.com/story/ryanair-earnings-fall-on-rising-costs-2018-07-23).
"While we continue to actively engage with pilot and cabin crew
unions across Europe, we expect further strikes over the peak
summer period as we are not prepared to concede to unreasonable
demands that will compromise either our low fares or our highly
efficient model," said Ryanair in its earnings report.
Atos SE shares (ATO.FR) ended the day 6.7% lower after the
French information-technology services company reached a $3.4
billion deal to buy U.S.-based Syntel Inc
(http://www.marketwatch.com/story/frances-atos-to-buy-it-company-syntel-in-34-billion-deal-2018-07-22).
Atos also said Monday first-quarter revenue rose
(http://www.marketwatch.com/story/atos-revenue-grows-on-strong-momentum-2018-04-25)
slightly, to 2.95 billion euros ($3.6 billion), on 2% organic
growth.
Julius Baer Group AG (BAER.EB) closed down 4% after the Swiss
bank posted a rise in first-half net profit but said clients are
taking heed of mounting trade tensions.
"Markets had a strong and upbeat start to the year but ended the
first half on a more cautious note, pondering the potential impacts
of trade tensions and of an impending end to quantitative easing,"
Chief Executive Bernhard Hodler said in a statement.
Ocado Group PLC (OCDO.LN) , a British online grocery service and
platform-technology provider, topped advancers on the Stoxx 600 and
closed Monday trading 5.5% higher.
(END) Dow Jones Newswires
July 23, 2018 12:41 ET (16:41 GMT)
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