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EUROPE MARKETS: China Data Whacks European Markets

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06/14/2019 | 05:54am EDT

By Dave Morris

Weak China industrial data rattled European markets, sending equity indexes into negative territory over global growth fears.

How did markets perform?

The Stoxx 600 shrank 0.4% to 379, after rising 0.2% Thursday.

The U.K.'s FTSE 100 was at 7,352.2, down 0.2% following Thursday's flat close.

The pound fell 0.2% to $1.2645, after shrinking 0.3% Thursday.

In Germany, the DAX was 0.6% lower at 12,097.9. It increased 0.4% on Thursday.

France's CAC 40 edged down 0.2% to 5,364. It also closed flat on Thursday.

Italy's FTSE MIB retreated 0.2% to 20,595, after climbing 0.8% Thursday.

What's moving the markets?

Economic data out of China set investors on a pessimistic path Friday, as U.S. tariffs appeared to bite. Industrial production in May grew 5% year over year, lower than the 5.5% consensus and the lowest growth figure in the category in more than 17 years. Fixed asset investment was also a disappointment, expanding 5.6% in the first five months of the year versus 6% expected. The slowing of China's economy is forecast to pressure the outlook for global growth in 2019.

One analyst believes Friday's weak trading volumes could indicate complacency among investors that central banks will support equities with fresh stimulus. Ian Williams, economics and strategy research analyst at Peel Hunt, wrote: "The most notable feature of yesterday's European equity trading session was the subdued level of volumes... There is a danger that confidence in the Fed rising to the rescue of risk assets once again next week has been overdone."

In the U.S., more than 600 companies including Walmart Inc. and Target Corp. and 150 trade associations signed a letter urging President Donald Trump's administration to resolve the trade dispute with China to avoid damaging the national economy. The move comes ahead of a potential meeting between Trump and Chinese President Xi Jinping at the G-20 summit in Osaka, though nothing has yet been confirmed.

In other international disputes, the Toronto Raptors beat the Golden State Warriors 114-110 to win the National Basketball Association championship four games to two, the first championship in franchise history.

Which stocks are active?

Signs of weaker economic growth hit European financial companies' shares, as lower interest rates are expected to restrain lenders' profitability. HSBC Holdings PLC shares fell 0.8%, while Banco Santander was down 0.6%.

European semiconductor companies were stung by Broadcom announcement that it expected the U.S. ban on Huawei equipment to cost it $2 billion in annual sales (https://www.wsj.com/articles/broadcom-lowers-revenue-outlook-amid-trade-tensions-11560459528). Broadcom is the first chip maker to quantify the impact of the ban. Infineon Technologies shares slumped 5.3%, STMicroelectronics declined 4.2% and AMS sank 7.4%.

Stocks mentioned in the article
ChangeLast1st jan.
AMS 1.75% 42.4 Delayed Quote.76.87%
BANCO SANTANDER -1.03% 4.003 End-of-day quote.0.76%
BROADCOM INC 0.08% 290 Delayed Quote.14.05%
CAC 40 0.03% 5552.34 Real-time Quote.17.33%
DAX 0.26% 12260.07 Delayed Quote.16.11%
EURO STOXX 50 -0.08% 3480.18 Delayed Quote.16.04%
FTSE 100 INDEX 0.28% 7234.11 End-of-day quote.0.00%
HSBC HOLDINGS PLC 0.20% 662.7 Delayed Quote.2.44%
INFINEON TECHNOLOGIES AG 1.87% 16.68 Delayed Quote.-3.94%
STMICROELECTRONICS 2.29% 16.315 End-of-day quote.30.42%
STOXX EUROPE 600 0.12% 387.25 Delayed Quote.14.56%
STOXX ITALY 45 (EUR) 0.03% 97.28 Delayed Quote.19.79%
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