EUROPE MARKETS: Europe's Stock Benchmarks Log Second Straight Loss As Trade Worries Weigh
August 02 2018 - 1:35PM
Dow Jones News
By Karen Friar, MarketWatch
Bank of England hikes rates as expected in unanimous
decision
European stocks finished the session firmly lower Thursday as
trade tensions between the U.S. and China appeared to be
experiencing fresh escalation, with Germany's main benchmark
dragged down by concerns about the impact of tariff action.
Disappointing earnings updates from Siemens AG and BMW AG added to
the downbeat mood, and the Bank of England lifted U.K. borrowing
costs, as expected.
How markets are moving
The Stoxx Europe 600 indexshed 0.8% to close at 386.64, logging
its second consecutive loss. On Wednesday, the pan-European index
fell 0.8%, after ending July on a up note.
Germany's DAX 30 index fell 1.5% to end at 12,546.33 amid
disappointing financial updates from key names. The index also
booked its second straight decline.
The U.K.'s FTSE 100 indextumbled 1% to 7,575.93, with losses for
the benchmark gathering steam after the Bank of England raised its
bank rate by 25 basis points, in an unexpectedly unanimous decision
by policy makers
(http://www.marketwatch.com/story/boe-rate-hike-not-enough-to-lift-british-pound-versus-dollar-2018-08-02).The
British stock benchmark has closed with a loss for the past two
sessions.
Italy's FTSE MIBended down 1.7% at 21,414.72, while Spain's IBEX
35fell 1% to 9,698.20. France's CAC 40 index declined by 0.7% to
5,460.98.
The eurofetched $1.1617, down 0.4% against the U.S. dollar, from
$1.1662 late Wednesday in New York.
What's driving markets
Trade tensions between U.S. and China returned to the fore after
President Donald Trump's administration threatened late Wednesday
to raise the proposed tariffs
(http://www.marketwatch.com/story/trump-seeks-25-tariffs-on-200-billion-of-goods-imported-from-china-2018-08-01)
on $200 billion of Chinese goods to 25%, more than double the 10%
originally laid out.
Concerns about the possible hit to exporters helped to pressure
lower Germany's main benchmark, the DAX.
The nine-member BOE policy-setting committee all voted in favor
of a quarter of a percentage point rate increase, the second hike
for the central bank in roughly a decade. In its statement, the BOE
said "the near-term outlook has evolved broadly in line with the
MPC's expectations." The BOE added that recent retrenchments in
economic output were temporary and appeared to emphasize that the
Monetary Policy Committee led by Gov. Mark Carney may need to do
more to prevent the economy from overheating, although it
"continues to recognize that the economic outlook could be
influenced significantly by the response of households, businesses
and financial markets to developments related to the process of EU
withdrawal," otherwise known as Brexit.
Check out:What to watch in the Bank of England's "Super
Thursday"
(http://www.marketwatch.com/story/rate-hike-expectations-lift-british-pound-but-brexit-dangers-remain-2018-07-30)
What strategists are saying
"The Monetary Policy Committee (MPC)'s decision to hike interest
rates from 0.50% to 0.75% today comes as no great surprise--it had
been over 90% priced into markets ahead of the meeting. However,
the minutes and Inflation Report lend some support to our view that
interest rates will rise by more than markets currently expect over
the next few years," wrote Ruth Gregory, senior U.K. economist at
Capital Economics in a Thursday research note immediately after the
decision.
"Trade war fears have come back to bite market sentiment, as
fears over a new low in U.S.-Chinese trade relations has driven a
new bout of selling across global indices. European markets have
followed their Asian counterparts lower, and with U.S. futures
pointing towards a similarly dour open, there is reason to believe
that we will see these trade concerns cloud trading for the rest of
the week," Joshua Mahony, market analyst at IG, said in a note.
Stock movers
Shares of Siemens(SIE.XE)lost 4.7% after the German
conglomerate's profit fell in the third quarter
(http://www.marketwatch.com/story/siemens-profit-falls-hit-by-higher-tax-rate-2018-08-02),
hit by underperformance at its oil-and-gas unit, and by a higher
tax rate.
Among the other decliners in Frankfurt were BMW
shares(BMW.XE)which edged 0.4% lower, and those for Hugo Boss
AG(BOSS.XE)slumped by 7.8% after financial updates.
KAZ Minerals PLC shares(KAZ.LN) led the region's decliners,
plunging by 28% on the mining company will buy the Baimskaya copper
project
(http://www.marketwatch.com/story/kaz-mineral-shares-fall-on-russian-copper-deal-2018-08-02)
in Russia. Altice Europe NV(ATC.AE)fell 16.3% after the telecom
operator said acquisition costs will limit cash flow
(http://www.marketwatch.com/story/altice-earnings-top-views-sees-crimp-to-cash-flow-2018-08-02)
in France.
As for advancers, Metro AG(B4B.XE)jumped by 9.7% after the
German food wholesaler said it expects earnings and sales to rise
in fiscal 2018. Rolls-Royce Holdings(RR.LN)added 7.1% after the
aircraft-engine maker boosted its full-year outlook
(http://www.marketwatch.com/story/rolls-royce-ups-outlook-despite-engine-repairs-2018-08-02).
(END) Dow Jones Newswires
August 02, 2018 13:20 ET (17:20 GMT)
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