UKX FTSE 100 Index

By Sara Sjolin, MarketWatch

HSBC shares slip after earnings

European stock markets struggled for direction on Monday, as traders digested another round of earnings reports and a flare-up in trade tensions between the U.S. and China.

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 slipped 0.1% to 388.96, but was swinging in and out of positive territory through the morning. The small loss on Monday followed a 0.7% rally on Friday (http://www.marketwatch.com/story/european-stocks-recover-ground-lifted-by-tech-sector-2018-08-03), when tech shares tracked their U.S. counterparts higher after a well-received earnings report from Apple Inc. (AAPL) .

The U.K.'s FTSE 100 index was flat at 7,659.27 on Monday, while France's CAC 40 index was marginally higher at 5,481.08. Germany's DAX 30 index lost 0.3% to 12,573.78.

The euro fell to $1.1559 from $1.1568 late Friday in New York.

The pound was down at $1.2961, compared with $1.3002 on Friday.

What is driving the market?

The indecisive 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 (https://twitter.com/realDonaldTrump/status/1025830647649247232)." That came after China on Friday threatened (http://www.marketwatch.com/story/china-threatens-new-tariffs-on-60-billion-of-us-products-2018-08-03) to slap 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" (http://www.marketwatch.com/story/us-has-lost-its-mind-over-trade-beijing-ready-for-long-fight-chinese-newspaper-2018-08-06) 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 ongoing global trade dispute is weighing on corporate investments, German manufacturing orders plunged in June by 4% (http://www.marketwatch.com/story/german-manufacturing-orders-plunged-in-june-2018-08-06-24854214), data out on Monday showed.

Meanwhile, in the U.K., international trade secretary Liam Fox said in a Sunday Times interview (https://www.thetimes.co.uk/edition/news/liam-fox-says-there-is-a-6040-chance-of-no-dealbrexit-lpsgm2gdf) 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.

Stock movers

Shares of IWG PLC(IWG.LN) sank 21% after the coworking-and-workspace company ended talks with potential suitors (http://www.marketwatch.com/story/iwg-ends-talks-with-potential-suitors-profit-dips-2018-08-06), 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(JE.LN)declined 1.8% 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.

HSBC Holdings PLC(HSBA.LN)(HSBA.LN) dropped 0.4% after the bank said adjusted profit before tax fell (http://www.marketwatch.com/story/hsbc-profit-gets-a-lift-from-retail-banking-2018-08-06).

Linde AG(LINU.XE) gave up 9.4% after the German industrial-gases company said Sunday that it and Praxair Inc.(PX) may have to sell more assets than expected to get antitrust approval for their merger. That is seen as potentially jeopardizing the deal (http://www.marketwatch.com/story/linde-shares-sink-as-ftc-comments-on-praxair-deal-2018-08-06).

On an upbeat note, Tod's SpA (TOD.MI) jumped 16% after the Italian luxury goods company posted better-than-expected first-half results (http://www.marketwatch.com/story/tods-shares-rise-after-earnings-release-2018-08-06).

(END) Dow Jones Newswires

August 06, 2018 05:17 ET (09:17 GMT)

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