STOXX 600 caps worst week since March

SAME HEADLINES::Concerns that the trade war between the US and China might escalate dented investors’ risk appetite, weighing on Europe’s benchmark index

Reuters, LONDON and MILAN, Italy

Sun, Sep 09, 2018 - Page 14

European shares steadied on Friday, but suffered their worst week since the end of March as uncertainty over global trade rippled through markets and investors dumped riskier sectors.

The pan-European STOXX 600 benchmark was 0.08 percent higher at the close, recovering from a fresh five-month low hit earlier in the session, while the exporter-heavy German DAX also ended little changed.

The STOXX 600 ended off earlier lows after White House economic adviser Larry Kudlow told CNBC that the US continued to talk with China about a number of trade issues, but added that so far China has not met Washington’s requests.

However, the STOXX 600 fell 2.2 percent on the week, its worst performance since the end of March, with investors’ appetite for risk dented by worries that the trade dispute between the US and China could escalate, as well as weakness in emerging markets.

“Equity investors have returned from their holidays to find the headlines still dominated by trade war fears and are understandably in no great rush to commit cash to equities with index benchmarks in a clear short-term downtrend,” Peel Hunt LLP strategist Ian Williams said.

Shares in more cyclical sectors, such as financials, energy and miners, were shunned this week as markets remained on edge after the deadline to comment on proposed US tariffs on an additional US$200 billion of Chinese imports passed.

Basic materials and banks were the worst sectoral performers, both ending down about 1 percent.

European autos, which have been particularly sensitive to headlines on tariffs, on Friday hit a fresh 33-month low before recovering some ground and end up 0.2 percent.

A 1.3 percent fall in shares of International Consolidated Airlines Group SA (IAG) weighed on the travel and leisure sector, which fell 0.3 percent.

British Airways, owned by IAG, said it had suffered a data breach involving the theft of financial and personal data from potentially hundreds of thousands of customers.

“That credit card information has been accessed by the hackers arguably makes this an order of magnitude more serious than the high-profile data breach at Dixons Carphone in 2017,” AJ Bell investment director Russ Mould said.

In the Dixons breach, the affected customer records did not contain payment card or bank account details.

Among Friday’s gainers, shares in French telecoms Iliad SA rose 2.3 percent on speculation that the company could be delisted.

Iliad declined to comment on the rumors.

Amer Sports Oyj advanced 3.4 percent after the Finnish sporting goods maker put its Mavic cycling business up for possible sale late on Wednesday.

The company said that it was reviewing options for its fitness equipment and sports watch businesses.