Europe close: Stocks end the day at session lows
By Alexander Bueso
Date: Wednesday 05 Dec 2018
(Sharecast News) - Stocks on the Continent finished near their worst levels of the day although losses were but a fraction of those seen on Wall Street overnight, as China sounded a positive note on the likelihood of being able to reach a trade deal with the US.
The main US stockmarket indices reeled on Tuesday amid a flurry of reports questioning the prior day's optimism around a US-China trade deal and a deafening silence from Beijing following multiple remarks by US officials, including possibly exaggerated claims from the American President regarding the possible elimination of Chinese tariffs on US auto exports.
On Wednesday however, China's Ministry of Commerce said Beijing would work quickly to implement the specific issues that had been agreed upon, even as the two sides "actively promote the work of negotiations within 90 days in accordance with a clear timetable and road map."
Commenting on the situation in markets, Chris Beauchamp at IG said: "Indices on this side of the Atlantic are now back to the lows of November - while this might hold, the outlook does not look particularly encouraging.
"Tariffs are back on the agenda it seems thanks to the president's tweets, and while the yield curve inversion, when it happens, is not a 'sell everything' signal, a US recession is now a possibility in the near future in a way that would have seemed unthinkable at the beginning of the year, when 'synchronised global growth' was all the rage."
Also overnight, the US interest rate curve had partially inverted, as the yield on three-year Treasuries moved above those on five-year debt, in a possible sign of economic weakness ahead.
By the end of trading, the benchmark Stoxx 600 was down by 1.16% or 4.16 points to 354.27, alongside a 1.19% or 135.08 point fall to 11,200.24 for the German Dax, while the Cac-40 was down by 1.36% or 68.29 points to 4,944.37.
On the economic front, the economic news was rather mixed, IHS Markit's Purchasing Managers Index for the euro area services sector printed at 53.4 for November (consensus: 53.1), versus a preliminary print of 53.1 but down from a reading of 53.7 in the month before.
However, according to the survey compiler the readings for Italy in November's PMI survey were pointing towards another contraction in the economy over the last three months of 2018.
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