EUROPE MARKETS: European Stocks Fall From 4-month High After Weak PMI Numbers
May 23 2018 - 05:57AM
Dow Jones News
By Sara Sjolin, MarketWatch
Euro slides after PMIs raise concerns that recovery is
slowing
European stocks moved sharply lower on Wednesday, weighed by the
return of geopolitical concerns after the latest comments from U.S.
President Donald Trump and a round of disappointing eurozone
data.
The pound dropped to a fresh 2018 low after U.K. inflation
unexpectedly slipped in April.
What are markets doing?
The Stoxx Europe 600 index lost 0.9% to 393.41, pulling back
from its highest close since Jan. 29 reached on Tuesday
(http://www.marketwatch.com/story/european-stocks-inch-higher-as-italy-tensions-ease-for-now-2018-05-22).
Germany's DAX 30 index slumped 1.5% to 12,968.59, while France's
CAC 40 index dropped 1.3% to 5,567.72.
The U.K.'s FTSE 100 index fell 0.6% to 7,828.37.
In Italy, the FTSE MIB index slid 1.8% to 22,802.01 as traders
waited for President Sergio Mattarella's decision on the prime
minister candidate put forward by a euroskeptic alliance to lead
their coalition government.
The euro fell to $1.1720 from $1.1780 late Tuesday in New
York.
The pound exchanged hands at a fresh 2018 low at $1.3346, down
from $1.3432 late Tuesday.
What is driving the market?
Stocks in Europe declined as part of a global selloff spurred by
worries about Trump's latest comments on North Korea and the China
trade talks. The American president said late Tuesday there is a
"very substantial chance" the historic meeting between him and
North Korea's leader Kim Jong Un won't happen in June as planned
(http://www.marketwatch.com/story/trump-says-summit-with-north-koreas-kim-may-happen-later-than-scheduled-2018-05-22)
unless Pyongyang meets certain conditions.
Separately, Trump said Tuesday that he was "not satisfied" with
the latest round of trade talks with China
(http://www.marketwatch.com/story/trump-today-president-suggests-world--class-poker-player-xi-to-blame-for-shift-in-north-koreas-attitude-about-summit-2018-05-22).
Equity markets worldwide have rallied in recent days on signs of an
easing in tensions between the world's two largest economies,
making a full-blown trade war appear less likely.
Closer to home, news emerged on Tuesday afternoon that the U.S.
may not extend the exemption for the European Union on steel and
aluminum tariffs. EU officials said the Trump administration had
proposed cutting the trade bloc's steel exports to the U.S. by 10%
(http://www.marketwatch.com/story/trump-weighs-10-cuts-on-eu-steel-aluminum-exports-to-us-2018-05-22).
What data are in focus?
The latest economic activity data from the eurozone came in
weaker than expected. The composite flash purchasing managers index
for the currency union fell to an 18-month low in May at 54.1.
Economists had expected a 55.1 reading, according to FactSet
consensus estimates.
In France, data showed unemployment rose in the first quarter of
the year, seen as another sign the eurozone recovery of 2017 is
losing momentum in 2018.
U.K. inflation unexpectedly dipped in April, according to the
Office for National Statistics. Consumer prices rose 2.4% last
month, down from 2.5% in March and missing forecasts of 2.5%
reading.
What are strategists saying?
"Whilst certainly not entirely gloomy, the euroboom has
descended pretty quickly and the outlook is not overly positive,"
said Neil Wilson, chief market analyst at Markets.com, in reference
to the latest PMI data.
"Add in the political risks emerging in Italy, and it all looks
quick tricky for the ECB as it tries to exit QE. As previously
argued, the ECB missed its window of opportunity late last year to
really push normalization and is now in more of a bind," he said in
a note, referring to the European Central Bank's steps toward
ending a stimulus effort known as quantitative easing.
Stock movers
Euronext NV (ENX.FR) slid 5% after UBS downgraded the
stock-exchange operator to sell from neutral.
Shares of Marks & Spencer Group PLC (MKS.LN) (MKS.LN) jumped
3.5% after the retailer posted profit ahead of expectations
(http://www.marketwatch.com/story/marks-spencer-2018-pretax-profit-plummets-62-2018-05-23).
Standard Chartered PLC (STAN.LN) rose 1.5% after a report in the
Financial Times that Barclays PLC (BCS) (BCS) is exploring merger
options
(http://www.marketwatch.com/story/barclays-explores-merge-options-ft-2018-05-23),
including a tie-up with Standard Chartered. Barclays shares were
down 0.7%. Sources close to Barclays, however, dismissed the report
(https://www.reuters.com/article/us-barclays-m-a/barclays-has-no-plans-for-tie-up-with-rival-banks-sources-idUSKCN1IO0OK?utm_campaign=trueAnthem:+Trending+Content&utm_content=5b05162404d301382da1be81&utm_medium=trueAnthem&utm_source=twitter),
according to Reuters.
Babcock International Group PLC (BAB.LN) climbed 3.2% after the
defense-services provider said profit before tax increased by 8% in
fiscal 2018
(https://www.google.dk/search?q=babcock&rlz=1C1GGRV_enGB752GB752&oq=babcock&aqs=chrome..69i57j69i60l2j0l3.935j0j9&sourceid=chrome&ie=UTF-8).
(END) Dow Jones Newswires
May 23, 2018 05:42 ET (09:42 GMT)
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