US-China deal concerns dampen markets
European shares fall and US stocks plunge to wipe out rally in risk assets Iseq falls by 2.5% as AIB and Bank of Ireland help drag the index down
European shares fell yesterday, led lower by auto stocks as investors started to question whether the truce agreed by the United States and China on their trade dispute would lead to a long-term deal. US stocks plunged, with the Dow Jones Industrial Average tumbling more than 800 points, as a litany of concerns wiped out the rally in risk assets.
The Iseq fell 2.5 per cent, tracking its European peer indices, which all struggled on a day dominated by gloom over global trade prospects.
The State’s two pillar banks performed poorly, which helped to drag the index down.
Bank of Ireland fell 3.6 per cent to close the session at €5.34, while AIB dropped 2.7 per cent to finish at €3.70.
Building materials behemoth CRH, which is usually affected by worries over global trade due to its heavy presence in the US and worldwide , fell 3.8 per cent to €24 per share.
Ryanair fell 2.3 per cent to €11.40, despite striking a deal with German unions.
The Ftse 100 closed down 0.6 per cent, with the stronger sterling dragging on its exporter-heavy constituents.
Thomas Cook shares fell as much as 16.9 per cent to hit their lowest level in six years amid growing concerns about the tour operator’s debts. The shares closed 3.9 per cent lower after an extremely choppy session as investors braced for the stock to be demoted from the midcap index.
The quarterly reweighting of the indexes also roiled some shares, with Hiscox expected to oust Royal Mail from the blue chips and storied carmaker Aston Martin set for promotion to the midcap index just two months after its IPO. Final moves will be announced by the LSE today based on market cap at yesterday’s close.
BAE Systems, down 5.5 per cent, was one of the biggest decliners after Deutsche Bank cut its price target on the stock. Mining stocks such as Antofagasta and Glencore, down 3.5 and 1 per cent respectively, fell as copper prices eased back on doubts over how fragile a trade truce struck at the G20 on Saturday was.
French catering group Elior sank 8.6 per cent after cutting its sales growth outlook, and Belgian postal services firm Bpost plunged 22.8 per cent after a profit warning. France’s JCDecaux fell 2.9 per cent after Exane BNP Paribas reinitiated its coverage of the stock with an “underperform” rating.
Energy stocks gave up earlier gains as crude prices came off highs on worries that demand would stall due to a Sino-US trade war, and that Russia remained a stumbling block to a deal to cut global crude supply.
German industrial gases group Linde will replace British bank Barclays on the leading index of pan-European stocks Stoxx Europe 50, it was announced. The change comes as part of the quarterly reshuffle and will be effective at the opening of European trading on December 24th. Linde shares rose 2.1 per cent and Barclays was down 2.6 per cent.
Wall Street tumbled more than 3 per cent, led lower by bank and industrial shares, as the US bond market sent unsettling signs about economic growth and investors worried anew about global trade.
The Dow Jones Industrial Average fell 799.36 points, or 3.1 per cent, to 25,027.07, the S&P 500 lost 90.31 points, or 3.24 per cent, to 2,700.06 and the Nasdaq Composite dropped 283.09 points, or 3.8 percent, to 7,158.43. The New York Stock Exchange and Nasdaq will be closed today, for a day of mourning for former President George HW Bush, who died on Friday at the age of 94.
The trade-sensitive industrial sector fell 4.4 per cent, with
Boeing and Caterpillar declining 4.9 per cent and 6.9 per cent, respectively.
Brent crude oil settled at $62.08 per barrel, or jumped up 0.63 per cent. U.S. light crude was last up 30 cents at $53.25. – additional reporting Reuters