Europe midday: Stocks dip as growth and political headwinds mount
By Alexander Bueso
Date: Monday 10 Dec 2018
(Sharecast News) - Stocks have started the week on a down note, weighed down by a raft of concerns, around ongoing political tensions on both sides of the Channel, weak data out of China at the weekend and US-China trade talks.
"This economic weakness coming as it does, against a backdrop of increasing concerns that there will not be a speedy conclusion to the trade tensions between the US and China, is giving investors little reason to buy back into the market at a time of the year when volume and liquidity is likely to decline further," said Michael Hewson, chief market analyst at CMC Markets UK.
In Italy, reports at the weekend indicated the government was willing to to lower its target for the country's budget deficit next year to 2.2% of GDP, versus an initial goal of 2.4%, but that remained above the 1.9% target that the European Commission was pushing for.
Meanwhile, Saturday saw a fourth consecutive weekend of demonstrations in the French capital against proposed fuel tax hikes, with 125,000 protesters having reportedly taken part, 1,200 of which were arrested.
On top of that, on Sunday, Beijing summoned the US ambassador to protest against the detention of Huawei's finance director in Canada, with China possibly of the belief that it was an intentional move on the part of the White House, according to some market-watchers.
As of noon, the benchmark Stoxx 600 was down by 2.18 points or 0.63% to 343.27, alongside a drop of 0.45% or 47.18 points to 10,740.91 for Germany's Dax.
France's Cac-40 meanwhile was off by 0.47% or 23.38 points at 4,789.75 while Milan's FTSE Mibtel was down by 0.48% or 89.54 points at 18,655.78.
Pacing losses on the Continent, the Stoxx 600 sector gauge for Chemical stocks was falling 1.72% to 794.36 after BASF warned on profits, citing low water levels on the Rhine, trade war worries and soft demand for autos.
In the background meanwhile, much weaker-than-expected import figures released in China on Saturday underlined worries around global growth, and although most analysts appeared to be dismissive, financial markets had recently begun to question whether the US central bank would go ahead with another interest rate hike at the end of the month.
China's imports rose at a 3% year-on-year clip in November, which was down from 20.8% in the month before (consensus: 9.7%), the latest customs data showed.
Possibly highlighting the toll that protests were taking on France's economy, a monthly index compiled by the country's central bank indicated that France's GDP had slowed from 0.4% over the three months to September to 0.2% in the fourth quarter.
Over in Italy, ISTAT reported a 0.1% month-on-month rise in industrial output as production of durable consumer goods jumped by 2.6% versus September.
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