Europe open: Markets drop as Sino-US talks falter, German GDP grows
By Duncan Ferris
Date: Thursday 14 Nov 2019
(Sharecast News) - European stocks were lower on Thursday morning, as trade negotiations between Beijing and Washington appeared to stumble, while Germany narrowly avoided falling into a technical recession.
At 0850 GMT, the Stoxx 600 was 0.2% lower at 405.04, as the German DAX dropped by 0.4% to 13,176.86 and France's CAC 40 edged 0.1% downward to 5,900.50. Meanwhile, London's FTSE 100 fell by 0.2% to 7,333.41.
As ever, Sino-US trade developments remained in focus, with reports from Wednesday evening suggesting that negotiations for a phase one deal had stumbled on disagreements over farm purchases.
CMC Markets analyst Michael Hewson said: "We were told a few weeks ago that a phase one deal was close, and would be signed soon and yet here we are still finding problems around soybean and pork purchases, particular in terms of the actual amounts. And so the theatre goes on, with a deal unlikely to be signed off any time soon."
In local news, Germany just managed to avoid dropping into recession as it registered third quarter GDP growth of 0.1%, beating expectations for a 0.1% decline and coming after a second quarter contraction of 0.2%.
Analysts from Pantheon Macroeconomics said: "So, no recession, but most definitely a very weak economy. In some sense, this is the "worst" of both worlds for markets. Today's data confirm that the German economy has now stalled, but the headlines are probably not dire enough to prompt an immediate and aggressive fiscal response from Berlin."
Meanwhile, Chinese data left a sour taste in the mouth, with retail sales growth slipping to 7.2% in October when it had been expected to remain unchanged from September's reading of 7.8%.
The country's industrial production growth also disappointed, coming in a 4.7% year on year growth for the month, down from 5.8% in September and well below the consensus estimates of 5.4%.
Among individual stocks, German genetic testing specialist Qiagen surged amid reports of an approach from instruments maker Thermo Fisher Scientific.
French conglomerate Bouygues was also in the green after its revenue and operating profit for the first nine months of the year beat consensus expectations, following a good performance from its construction and telecoms businesses.
Daimler was in the red after the German auto manufacturer unveiled a new cost-cutting programme which it said will negatively impact earnings over the next two years.
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