Europe shaken by doubt over global trade

By City A.M.

WORRIES about US bond markets signalling an impending recession, and a still rumbling trade war between the world’s top two economies, saw European shares sink further on Wednesday after a three per cent drop on Wall Street the previous day.

The pan-European Stoxx 600 ended down 1.2 per cent at its lowest level since 23 November. The Eurozone stock index and Germany’s Dax also fell 1.2 per cent. US stock markets were shut yesterday for a day of mourning in honour of former president George HW Bush who died last week.

Cyclical sectors like construction and miners posted the biggest falls, down 2.2 and 1.8 per cent respectively, as investors dumped stocks highly sensitive to economic growth.

The inversion of parts of the US yield curve means investors are beginning to panic about future growth and inflation, Ricciardi added.

Analysts cut their estimates for 2019 earnings growth as markets turned sour this autumn.

Banks also fell, down 0.7 per cent, but losses were limited by a bounce in Italian lenders as Italian government bond yields continued to fall sharply on hopes that Rome could cut its budget spending plans.

Tech stocks fell 1.8 per cent after the highly valued US tech sector sold off.

Chipmakers AMS, STMicroelectronics and Infineon fell 2.3 per cent to 6.1 per cent following a sharp drop in chip stocks on Wall Street overnight.

German carmakers slightly outperformed the Dax as investors digested what seemed a relatively positive outcome from a meeting of auto executives at the White House.

US President Trump pressed car makers to increase investments in the United States, something the executives said they planned to do but wouldn’t be able to if the administration went ahead with threatened tariffs. White House economic adviser Larry Kudlow said he did not think that car tariffs were imminent.

This article provided by NewsEdge.