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EUROPE MARKETS: Trade Tensions Weigh On Europe With Tech, Apparel Makers Down

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05/20/2019 | 09:08am EDT

By Dave Morris

Ryanair shares drop after profit warning

European stocks stumbled Monday as trade tensions kicked off the week, dragging global markets lower, with technology and apparel makers under pressure on the continent.

How did markets perform?

The Stoxx 600 was down 1.3% to 376.59, after falling 0.4% Friday.

Italy's FTSE MIB plunged 2.8% amid increased political tensions, after Deputy Prime Minister Matteo Salvini led a rally Saturday ahead of European elections, vowing to take on the region's mainstream leaders.

The U.K.'s FTSE 100 fell 0.9% to 7,282.65. On Friday it had edged down 0.1%.

The pound reversed course and gained 0.2% to $1.2743 after falling 0.4% Friday.

In Germany, the DAX (DAX) declined 1.8% to 12,013.75, adding to its woes Friday when it swooned 0.6%.

France's CAC 40 fell 1.8% to 5,340.72. On Friday it moved down 0.2%.

What's moving the markets?

Shares of chip makers were under pressure as U.S. technology companies have begun to comply with the White House's ban on China's Huawei Technologies Inc. Shares of Infineon Technologies slid nearly 5% after the German chip group said it was also cooperating. The company said "the great majority" of products Infineon delivers to Huawei are "not subject to U.S. export control law restrictions, therefore those shipments will continue."

Market Snapshot:Stocks poised to start the week lower as trade tensions persist

U.S. President Donald Trump said concessions in negotiations could not be "50-50" because trade practices by China had historically damaged the U.S. There is currently no timeline for the two sides to resume talks. The U.S. appears to have shifted focus to other areas such as trade with Canada and Mexico, agreeing Friday to exempt the two countries from steel and aluminum tariffs.

Sunday's meeting of the Organization of the Petroleum Exporting Countries (OPEC) sent oil prices higher after Saudi Energy Minister Khalid al-Falih said efforts to shrink crude inventories could continue into the second half of 2019. But prices came off earlier highs on concerns there wasn't full consensus on that.

Brent crude oil was up 0.4% to $72.54 a barrel, while West Texas Intermediate (WTI) rose 0.3% to $62.92 a barrel.

Writing in the Sunday Times, U.K. Prime Minister Theresa May said she hoped to get a Brexit deal through Parliament on her fourth attempt by making what she called a "new and improved" offer. The move eliminates the prospect of indicative votes, but critics warned that the gambit would fail unless there were significant changes, none of which May mentioned in her article.

Which stocks are active?

Ryanair Group Holdings PLC (RYAAY) dropped 3% after warning that the grounding of Boeing's 737 MAX jets would have a negative impact on the coming year's results. The company reported full year earnings to March 31 showing pretax profits fell 30% year over year. It cited fuel and staff costs as factors in the decline.

Russ Mould, investment director at AJ Bell, said: "The silver lining to this thick cloud is that its peer group are facing exactly the same pressures and many operators have far less secure balance sheets than Ryanair."

Deutsche Bank AG was down 3% after UBS analysts downgraded the shares from neutral to sell. They cited factors such as heavy competition in its home market of Germany and limited strategic options, given the collapse of merger talks with Commerzbank AG and a lack of compelling alternatives.

Other European chipmakers also came under pressure, with ams dropping 11%, STMicroelectronics (STM.FR) down 8% and ASML Holding NV.

Luxury-goods makers, many of whom count China as a key market, were also down, with LVMH Moet Hennessey (LVMUY) dropping nearly 3%.

Stocks mentioned in the article
ChangeLast1st jan.
AMS -1.76% 43.48 Delayed Quote.84.55%
CAC 40 -0.40% 5643.08 Real-time Quote.17.72%
CAC 40 INDEX FUTURE (FCE) - LIF/C1 0.68% 5683 Delayed Quote.19.81%
DAX -0.20% 12486.56 Delayed Quote.18.26%
DEUTSCHE BANK AG 0.81% 6.852 Delayed Quote.-1.65%
EURO STOXX 50 -0.38% 3556.26 Delayed Quote.16.41%
FTSE 100 INDEX 0.28% 7234.11 End-of-day quote.0.00%
INFINEON TECHNOLOGIES AG -1.39% 16.644 Delayed Quote.-4.15%
LME ALUMINIUM CASH -0.96% 1704.5 End-of-day quote.-8.26%
RYANAIR HOLDINGS -0.04% 12 Delayed Quote.11.63%
SILVER -0.31% 17.594 Delayed Quote.13.11%
STMICROELECTRONICS -0.96% 19.015 End-of-day quote.55.48%
STOXX EUROPE 600 -0.49% 389.69 Delayed Quote.13.36%
STOXX ITALY 45 (EUR) 1.02% 99.6 Delayed Quote.18.33%
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