EUROPE MARKETS: Europe Stocks Under Pressure As Italy, Greek Fiscal Worries Cast A Pall
October 02 2018 - 10:05AM
Dow Jones News
By Barbara Kollmeyer, MarketWatch
Italian -- EU squabbling over budget makes for volatile
session
Europe stocks were pushed lower on Tuesday, dogged by budgetary
concerns out of Italy and Greece, along with global growth and
trade concerns.
What are markets doing?
The Stoxx Europe 600 bounced off its session low, but was still
off 0.5% to 381.97, following Monday's rise of 0.2%.
Among the weaker bourses, Greece's ASX Composite slid 1.2% to
682.86. Italy's FTSE MIB Italy index was up less than 0.1% at
20,619.91, reversing an earlier loss of over 1%.
Germany's DAX 30 fell 0.4% to 12,288.86, while France's CAC 40
dropped 0.5% to 5,477.71. The U.K.'s FTSE 100 slipped 0.2% to
7,474.85.
The euro slipped to $1.1535 from $1.1578 late Monday in New
York. The pound slid to $1.2971 from $1.3040.
What is driving the market?
Fears of a brewing eurozone crisis got a fresh reboot on
Tuesday, with Prime Minister Giuseppe Conte reaffirming the
country's commitment to the euro
(https://www.reuters.com/article/us-italy-euro-pm/pm-conte-says-euro-is-unrenounceable-for-italy-idUSKCN1MC1AP)
after a lawmaker for the ruling Lega party, startled markets by
saying Italy might be better off outside
(https://www.cnbc.com/2018/10/02/italy-borrowing-costs-rise-after-new-calls-to-leave-the-euro.html).
Italy Economy Minister Giovanni Tria got a cold reception on
Brussels on Monday as he shopped the budget-deficit target that
skirts EU rules
(https://in.reuters.com/article/us-italy-budget-tria/italys-tria-says-many-eu-states-have-failed-to-respect-fiscal-rules-idINKCN1MB3MU?il=0).
(https://in.reuters.com/article/us-italy-budget-tria/italys-tria-says-many-eu-states-have-failed-to-respect-fiscal-rules-idINKCN1MB3MU?il=0)
The government's call for a higher-than-expected deficit target has
been rattled the market in recent days. Italy must submit a
completed draft budget to EU officials by mid-October.
And Greek stocks were under pressure after that government
submitted its own 2019 draft budget to parliament, with two
different scenarios, hinging on whether the government carries
through with pension cuts, which it has been trying to convince
creditors aren't needed.
Elsewhere, U.K. Prime Minister Theresa May was taking heat for
her plan to curb low-skilled immigrants once Brexit goes through,
put her at loggerheads with Juncker as well, with a debate fired up
in European Parliament
(https://www.theguardian.com/uk-news/2018/oct/02/eu-anger-over-mays-post-brexit-immigration-plan).
May is due to speak at the Conservative party conference on
Wednesday. On the data front, the U.K. construction sector grew at
the slowest pace in six months
(https://www.ft.com/content/752a3030-c61d-11e8-82bf-ab93d0a9b321).
Europe stocks also fell on a pullback across global markets as
investors fretted anew over trade, with fresh concerns about the
U.S./China trade stalemate
(http://www.marketwatch.com/story/us-believes-it-has-the-upper-hand-in-china-trade-negotiations-with-nafta-deal-done-2018-10-02).
Adding to that were concerns that the International Monetary Fund
will cut global growth forecasts
(http://www.marketwatch.com/story/imfs-lagarde-warns-of-slowing-growth-potential-shock-from-trade-dispute-2018-10-02)
in updated numbers next week.
Don't miss:A top London startup's CEO flags the biggest Brexit
threat to his industry
(http://www.marketwatch.com/story/a-top-london-startups-ceo-flags-the-biggest-brexit-threat-to-his-industry-2018-08-06)
What are strategists saying?
"What is more likely happening here is a flexing of muscles and
threats in the hope of pushing the limits of what the EU will
allow, and the base case remains that this doesn't ultimately
result in any real change to the present relationship," said David
Cheetham, chief market analyst at XTB Limited, in a note to
clients.
"Europe is dogged by concerns the Italian government will do
little to stabilize the common currency and although the tone of
dialogue over Brexit appears to be improving, there is still doubt
that agreement can be reached--or that Theresa May can survive a
leadership challenge," said James Hughes, chief market analyst at
AXI Trader.
Stock movers
Bank stocks took the biggest hits on Tuesday, with Credit Suisse
AG (CSGN.EB) down and BBVA SA (BBVA.MC) (BBVA.MC) each off around
1.7%. Heavyweight Nordea Bank ABP (NDAFI.HE) down 2.2%.
Ferguson PLC (FERG.LN) was a top decliner, off 6% after the
building materials supplier reported struggles in its U.K.
businesses and announced $72 million in restructuring charges.
(END) Dow Jones Newswires
October 02, 2018 09:50 ET (13:50 GMT)
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