EUROPE MARKETS: Europe Stocks Hammered By U.S.-China Trade Tensions
August 05 2019 - 8:13AM
Dow Jones News
By Steve Goldstein, MarketWatch
Europe stocks dropped sharply on Monday on concerns about being
caught up in escalating U.S.-China trade tensions.
The Stoxx Europe 600 index slumped 2.06% to 370.37, in broad-based selling.
The U.K. FTSE 100 index slumped 2.24% to 7241.13, the German DAX
skidded 1.81% to 11657.52 and the French CAC 40 slumped 2.18% to
5241.94.
What's moving markets
Asian stocks were hit hard as the dollar rose about the key 7
level vs. the Chinese yuan
(http://www.marketwatch.com/story/chinas-yuan-falls-below-key-level-with-us-dollar-2019-08-04),
and as protests continued in Hong Kong.
"Today's decision by China's central bank to allow the yuan to
breach the watershed 7 per dollar mark is a result of the threat by
President Trump to impose further U.S. tariffs on imports from
China. But it is also consistent with China's policy increasingly
to allow the currency to move in line with currency market
pressures," said analysts at Oxford Economics.
Markets are still reacting to the news that the U.S. plans to
impose 10% tariffs on $300 billion of Chinese goods that, unlike
past tariff rounds, would focus on consumer products. China has
said it would retaliate.
"German manufacturing continues to weaken. Driven by China
weakness and autos, a swift turnaround seems unlikely. This is
Europe's weak spot," said Ruben Segura-Cayuela, an economist at
Bank of America Merrill Lynch.
Related:Recession will come in 9 months if Trump takes this one
step, Morgan Stanley argues
(http://www.marketwatch.com/story/global-recession-will-come-in-9-months-if-trump-takes-this-one-step-morgan-stanley-argues-2019-08-05)
The yield on the key 10-year Treasury dropped as traders priced
in the possibility of more Fed rate cuts. "The fact that the Fed
bases its interest rate policy on US-China trade tensions rather
than the economic data raises the suspicion that Donald Trump may
be adding fuel to the flames on the Chinese side to increase
pressure for lower rates," said Ipek Ozkardeskaya, senior market
analyst at London Capital Group. U.S. stock futures pointed to a
sizeable decline at the open.
Focus stocks
HSBC Holdings shares (HSBA.LN) (HSBA.LN) dropped 2.1% after the
bank ousted its chief executive
(http://www.marketwatch.com/story/hsbc-ceo-john-flint-ousted-after-just-18-months-2019-08-04),
John Flint, and announced a rise in second-quarter profit. The bank
also announced it is going to cut thousands of jobs
(http://www.marketwatch.com/story/hsbc-to-cut-thousands-of-jobs-after-ceo-ouster-2019-08-05).
Shares of Linde PLC (LIN) rose 1.8% in Frankfurt, after the
industrial gases company reported a second-quarter profit and sales
that topped expectations and provided an upbeat full-year
outlook.
Scout24 (G24.XE) shares edged up 0.9% as the activist investor
Elliott
(http://www.marketwatch.com/story/elliott-advisors-pressures-scout24-2019-08-05)
pushed the German classifieds firm to sell its car-listings
business and ramp up a share buyback.
(END) Dow Jones Newswires
August 05, 2019 07:58 ET (11:58 GMT)
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