Sun, Mar 10, 2019 - Page 14 News List

Cocktail of poor data sinks European stocks further

Reuters, LONDON

European stocks on Friday notched up their biggest weekly fall since December last year, extending losses as weak Chinese and German data and poor US jobs numbers tightened bears’ grip on the market, underscoring worries about a global economic slowdown.

The STOXX 600 fell 0.8 percent on the day and 1 percent for the week, its biggest weekly fall since Dec. 21 last year, when a sharp sell-off was sweeping global markets.

Losses deepened in afternoon trading after US data showed that the employment market stalled last month, creating only 20,000 jobs, the weakest since September 2017.

“A 20,000 jobs print will be the talk of markets for days to come, but with the previous month revised up to 311,000, the average of the two, 155,500, is still a respectable number,” said Chris Beauchamp, chief market analyst at IG.

Eurozone bank stocks extended Thursday’s fall after the European Central Bank cut its growth forecasts and pushed out an interest rate hike.

In contrast, real-estate stocks jumped 1.9 percent as investors bet on lower-for-longer borrowing costs boosting the housing market.

Basic resources fell 1.7 percent and autos stocks tumbled 1.3 percent after China reported its biggest drop in exports in three years and German industrial orders unexpectedly fell.

Germany’s DAX fell 0.5 percent on Friday, down 1.2 percent for the week.

“The weakness in soft data since September is starting to impact hard data, so central banks are reacting,” said Sophie Huynh, multi-asset strategist at Societe Generale SA.

However, she added: “We should not over-interpret the China trade data because we have to take into account Chinese New Year and potential front-loading.”

Oil stocks were dragged lower by weak crude prices and news that Norway’s sovereign wealth fund, the world’s largest, will sell its stakes in oil and gas explorers.

Falls in European shares were muted compared with the 4.4 percent drop in Shanghai stocks after a blistering rally.

“In eurozone stocks there is already so much [investor] capitulation, it is so under-owned, that the reaction will naturally not be as sharp as in China, a much more high-beta market,” Huynh said.

EPFR data showed investors pulled about US$3.1 billion from European equity funds this week, driving total outflows from the region year-to-date to US$25.9 billion.

Company news provided no silver linings, with results roundly disappointing investors.

EssilorLuxottica SA shares fell 6.3 percent after the merged eyewear group’s maiden set of results disappointed the market and it postponed a long-awaited investor day.

“Broadly speaking, EssilorLuxottica’s first set of results for 2018 have essentially been penalized by the dollar and that is what’s hitting the shares sharply this morning,” said Gregoire Laverne, European equity manager at Roche-Brune Asset Management in Paris.

Swiss industrial machinery firm VAT Group tumbled 4.1 percent after it reported lower full-year earnings than expected and a weaker guidance for this year.

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