Sun, Dec 02, 2018 - Page 14 News List

European stocks cautiously dip ahead of G20 meeting

Reuters, LONDON

Weakened in morning trading by poor data from China, European shares closed lower on Friday ahead of yesterday’s crucial G20 talks between US President Trump and Chinese President Xi Jinping (習近平) over trade.

The pan-European STOXX 600 ended the session down 0.3 percent and on a 1.2 percent loss over the month after a disappointing earnings season.

However, the index gained 1 percent on a weekly basis.

Germany’s DAX, the most sensitive to China due to its big exporters, fell 0.4 percent on Friday.

German blue-chip companies posted their fourth straight month of losses, with a 1.6 percent dip last month — the longest losing streak since 2008.

Investors’ hopes of a partial recovery in stock markets this month — known as a “Santa rally” — hang on the leaders’ discussions resulting in a truce or de-escalation of the US-China trade war.

“There are only two people in the world that can deliver a Santa rally, Trump and Xi, and I don’t see that happening,” said Peter Garnry, head of equity strategy at Saxo Bank A/S in Copenhagen.

Garnry saw a 60 to 65 percent chance of the Trump-Xi talks resulting in “no deal.”

China on Friday reported its weakest factory growth in more than two years, reigniting fears about growth ahead of crucial trade talks.

“The weak data out of China is increasingly a little bit of a surprise. Most investors would have anticipated that at least some of that stimulus six months ago would have had an impact, but this really tells us how big the headwinds are,” Garnry said.

Autos stocks lost 1 percent on the data and anxiety over tariffs.

German car bosses are finalizing plans to visit the White House next week to discuss trade policy, German and US officials said.

“The problem with Europe is that ... quite a lot of our industrial supply chain and capital goods manufacturers have at least some exposure to the autos sector, so you can’t get away from it,” said Ian Ormiston, European smaller companies fund manager at Merian Global Investors.

Mining stocks fell 0.9 percent, hit by growth fears over China, the world’s top metals consumer.

Among the biggest drags on the STOXX were also luxury goods conglomerates Kering SA and LVMH Moet Hennessy Louis Vuitton SE, down 1.2 percent and 1.5 percent respectively.

Luxury stocks have been especially sensitive to slowing growth in China, high-end brands’ biggest market.

Zalando SE fell 4.4 percent after Kepler Cheuvreux cut its price target on the stock, saying it has become more skeptical about the long-term potential for margins at the online retailer.

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