European shares fell back yesterday as weakness in Chinese markets and worries over a trade dispute between the United States and China eclipsed optimism that a Nafta deal could be struck by today’s deadline.
The pan-European STOXX 600 ended the session down 0.3pc, while Germany’s DAX, which is sensitive to China due to its prominence as a German export market, dropped 0.5pc.
Chinese stocks fell after a Reuters poll showed activity in the factory sector was likely to have slowed for the third straight month in August amid uncertainty over an escalating trade war with the United States.
In Europe, trade-sensitive mining stocks tumbled 0.8pc.
“It’s a balancing act with, on the one hand, relatively positive momentum behind Nafta, but when the focus turns to China and trade war it doesn’t seem like an end is in sight because any escalation plays to Trump’s rhetoric of how he’s protecting US prosperity and jobs,” said Gary Waite, portfolio manager at Walker Crips Investment Management.
Though cars were also off earlier in the session, a concessionary tone from European Trade commissioner Cecilia Malmstrom on car tariffs helped lift the sector, which closed flat.
Earnings reports caused some sharp moves in individual stocks.
Shares in Europe’s largest property company Unibail-Rodamco-Westfield fell 4.3pc even though the company reported a boost to profits from its acquisition of an Australian shopping centre giant.
UK commercial property firm Intu fell 3.4pc after Morgan Stanley cut the stock to underweight from equal-weight, and peer Hammerson fell 5pc. Klepierre lost 3.3pc after a Morgan Stanley downgrade.
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