Europe close: Stocks end lower on US-China trade concerns
By Alexander Bueso
Date: Thursday 18 Jul 2019
(Sharecast News) - Stocks on the Continent were lower on Thursday although they managed to finish off their worst levels, with market sentiment dented by concerns around US-China trade talks and a slew of poor corporate updates out of the technology sector on both sides of the Atlantic.
"Stock markets in Europe are in the red as trade worries linger. The trading relationship between the US and China still has a long way to go, and dealers are a little nervous that tensions could flare up again. During the week, President Trump issued a dig at China and waned that tariffs could be slapped on $325 billion worth of goods," said David Madden at CMC Markets UK.
According to the Wall Street Journal, US-China trade talks had stalled due to Huawei.
But in later remarks to broadcaster CNBC, US Treasury Secretary, Steve Mnuchin, questioned the accuracy of that report, saying that the Chinese telecommunications giant was not a sticking point in the trade negotiations, adding that "there are just a lot of complicated issues".
By the end of trading, the benchmark Stoxx 600 was down 0.22% to 386.80, alongside a 0.92% drop for the German Dax to 12,227.85, but the FTSE Mibtel was up by 0.05% to 22,090.81.
Technology issues were especially weak, with the Stoxx 600 sector gauge off by 1.56% after SAP reported a drop in new cloud bookings, sending stock in the German software outfit down by 10%.
In parallel, British online fashion retailer Asos plummeted after surprising markets with a cut to profit guidance.
Sentiment towards the sector had been weak from the get-go on Thursday, following the latest quarterly update from US streaming video giant Netflix, which disappointed shareholders, sending its shares 10.38% lower.
However, stock in other tech companies, including IBM and E-Bay, which also released updates after the close of trading in New York on Wednesday, were faring better, with shares of the latter up by 5% ahead of the opening bell on Wall Street.
Shares in France's Richemont were also weaker, on the back of a poor performance for its watch division.
Significantly, Sterling was adding 0.42% to 1.1123 in the background, spurred by comments from the European Union's chief Brexit negotiator, Michel Barnier, in a BBC documentary, that he could be open to an alternative plan for the Irish border.
However, a spokeswoman for the European Commission quickly replied that there is "no news on the Brexit front", adding that the Withdrawal agreement will not be reopened for negotiations.
No major economic data was scheduled for release in the Eurozone on Thursday.
Nevertheless, following two days of meetings, in Chantilly, France, G7 country finance chiefs and central bankers cautiously endorsed fiscal policy support.
"Fiscal policy should be flexible and growth-friendly, while rebuilding buffers where needed," a summary of the talks prepared by the French G7 presidency said.
But not everyone shared that sense of urgency regarding the need for increased spending, with German finance minister, Olaf Scholz, reportedly pushing back and saying "if you do something now, it means the arsenal would be exhausted."
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