EUROPE MARKETS: European Stocks Erase Gains, Tracking U.S. Lower On Trade War Concerns
14 Marzo 2018 - 6:41PM
Dow Jones News
By Carla Mozee and Sara Sjolin, MarketWatch
Adidas shares in rally mode after results
European stocks erased earlier gains to close in negative
territory on Wednesday, tracking losses in the U.S. where growing
fears of a trade war sent markets lower.
Stocks in Europe had traded higher earlier in the day, buoyed
after European Central Bank President Mario Draghi said its
bond-buying program will likely continue if underlying inflation in
the region remains subdued.
Meanwhile, investors were also sifting through more corporate
updates, including one from Adidas AG that sent shares of the
German sports gear maker flying higher by double digits.
How markets are moving
The Stoxx Europe 600 index fell 0.2% to close at 374.94, after
trading as high as 377.71 earlier in the day.
France's CAC 40 index ended 0.2% lower at 5,233.36, while the
U.K.'s FTSE 100 indexfell 0.1% to 7,132.69
(http://www.marketwatch.com/story/ftse-100-finds-higher-ground-as-miners-find-cheer-in-china-data-2018-03-14).
Germany's DAX 30 rose 0.1% to 12,237.74, lifted by Adidas.
The euro bought $1.2370, down from $1.2392 late Tuesday in New
York.
What's driving markets
European stocks started to erase gains in the afternoon and
turned lower as U.S. markets suffered sharp losses
(http://www.marketwatch.com/story/us-stocks-shape-up-to-rebound-as-focus-turns-to-retail-sales-2018-03-14).
The downbeat mood stateside came as traders fretted that President
Donald Trump's tariffs on steel and aluminum tariffs could spark a
trade war, with the New York Times writing that manufacturing
stalwart Boeing Co. (BA) could be among companies particularly hurt
(https://www.nytimes.com/2018/03/14/business/economy/boeing-tariffs-china.html).
Regional indexes in Europe had traded higher earlier in the day
as the euro pulled back during a speech by ECB President Mario
Draghi at conference in Frankfurt. He did say the eurozone economy
has been strengthening more than it had anticipated.
However, "there is a very clear condition for us to bring net
asset purchases to an end: we need to see a sustained adjustment in
the path of inflation toward our aim, which is a headline inflation
rate of below, but close to 2% over the medium term," he said,
adding that "the performance of underlying inflation remains
subdued compared with previous recoveries."
The euro declined as soft inflationary pressures would likely
keep the European Central Bank from raising interest rates in the
foreseeable future. "The key issues we need to examine are wage
dynamics, their pass-through to prices, and the possible risks to
the inflation outlook," said Draghi.
A weaker euro can help bolster shares of European exporters as
it makes their goods and services less expensive to purchase for
overseas buyers. The euro on Tuesday leapt above $1.24 for the
first time since March 8 after an expected reading of U.S. consumer
prices February
(http://www.marketwatch.com/story/consumer-inflation-less-threatening-in-february-cpi-shows-2018-03-13)
tamped down concerns that the Federal Reserve will raise interest
rates four times in 2018 instead of three as previously
expected.
The eurozone's final reading of consumer price inflation for
February is scheduled for release on Friday.
What strategists are saying
"The positive mood in Europe has waned after U.S. markets turned
lower. Equity benchmarks pushed higher this morning, but have faded
toward the close as investors take their cues from their American
counterparts," said David Madden, market analyst at CMC Markets, in
a note.
"Growing fears of a trade war is weighing on U.S. stocks, and
indices like the Dow Jones are losing ground quickly. Dealers are
fearful that China will react to President Trump's tariffs by
imposing levies on the aerospace industry, and Boeing shares have
taken a hit," he added.
Stocks in focus
Adidas AG shares (ADS.XE)jumped 11% for the Stoxx Europe 600's
biggest gain after the sporting goods company upgraded its
long-term profitability target
(http://www.marketwatch.com/story/adidas-loss-widens-on-tax-hit-as-sales-rise-2018-03-14)
even as its posted a fourth-quarter net loss due to a one-off
negative tax effect. Adidas will also propose lifting its dividend
of EUR2.60 a share and that it will initiate share buyback program
of up to EUR3 billion.
Shares in Inditex SA (ITX.MC)rose 3.8% as the parent company for
apparel retailer Zara said sales in stores that have been open for
a year or more rose 5%. The rise, however, was a marked slowdown
(http://www.marketwatch.com/story/zara-parent-inditex-fy-profit-up-sales-sluggish-2018-03-14)
from the 10% growth reported the previous period.
Prudential PLC (PRU.LN)climbed 5.1% after the financial services
company saying it will demerge M&G Prudential
(http://www.marketwatch.com/story/prudential-to-demerge-mg-arm-2018-03-14).
Following that move, M&G Prudential will be an independent
provider of savings and investment services.
Shares in Bpost (BPOST.BT)tumbled 22% for the Stoxx 600's
biggest drop after the Belgian postal-services company forecast
2018 core earnings of 560 million euros ($693 million) to 600
million euros. That was below a Thomson Reuters consensus estimate
of 637 million euros.
(END) Dow Jones Newswires
March 14, 2018 13:26 ET (17:26 GMT)
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