EUROPE MARKETS: European Stocks Suffer Biggest Loss Since November As Bond Selloff Prompts Caution
By Barbara Kollmeyer and Sara Sjolin, MarketWatch
Energy names hit by weak crude prices
European stocks fell Tuesday, tracking losses across global markets, as investors grew increasingly concerned about a sharp rise in U.S. bond yields and its impact on the cost of borrowing.
Heavily-weighted oil companies led the decliners, as crude-oil prices came under pressure.
What are markets doing?
The Stoxx Europe 600 index fell 0.9% to close at 396.12, posting its biggest one-day percentage loss since Nov. 9, according to FactSet data.
Germany's DAX 30 index dropped 1% to 13,197.71, while France's CAC 40 index dropped 0.9% to 5,473.78. The U.K.'s FTSE 100 index (http://www.marketwatch.com/story/uk-stocks-rise-for-2nd-day-boosted-by-copper-rally-and-pound-pullback-2018-01-29)fell 1.1% to 7,587.98 (http://www.marketwatch.com/story/ftse-100-slides-as-us-bond-selloff-spooks-investors-2018-01-30).
The euro traded at $1.2393 compared with $1.2383 late Monday in New York, while the pound rose to $1.4114 from $1.4075.
The pound rebounded after falling below $1.40 earlier in the session on concerns about the Brexit negotiations. A leaked U.K. government analysis paper (http://www.marketwatch.com/story/uk-governments-own-analysis-shows-widespread-damage-from-brexit-2018-01-30) revealed that the country's economy would suffer widespread damage no matter what trade deal the U.K. agreed on its exit from the European Union.
What is driving the market?
European stocks fell as part of a wider global selloff, in which the Dow Jones Industrial Average fell more than 300 points (http://www.marketwatch.com/story/dow-futures-slide-150-points-signaling-another-painful-session-2018-01-30), as investors continued to fret about a rally in bond yields. Higher returns on debt securities typically make stocks and other assets perceived as risky less attractive to investors.
After hitting its highest level since April 2014 on Monday, the yield on the benchmark 10-year Treasury continued higher on Tuesday, trading above 2.71% on Tuesday.
Energy company shares were taking a hit, as U.S. crude futures dropped 2%. Shares of Statoil ASA (STL.OS) fell 2.2%, Total SA (TOT) (TOT) fell 1.7%, and BP PLC (BP.LN) (BP.LN) lost 1.5%.
Mining stocks were under pressure amid reports one of China's biggest coal regions had asked coal miners to cancel their holidays on fears over a potential power outage during the Spring Festival holidays. Anglo American PLC (AAL.LN) ended down 2.3%.
What are strategists saying?
"The global stock selloff has persisted into a second day, with overnight losses in Asia giving way to widespread selling in Europe and the U.S. Interestingly, with gold and the yen gaining ground over recent weeks, there has clearly been an underlying risk-off move waiting to rear its head. However, with Treasurys selling off throughout the beginning of 2018, there is reason to believe that market confidence will not be gone for long, as investors shift away from bonds amid improved economic and corporate performance," said Joshua Mahony, market analyst at IG.
Which stocks are in focus?
Leonardo SpA (LDO.MI) tanked 12% after the aerospace and defense company said it expects its 2017 results to be toward the lower end of its guidance range (http://www.marketwatch.com/story/leonardo-sees-2017-result-at-lower-end-of-guidance-2018-01-30).
Loomis AB (LOOM-B.SK) dropped 7.6% after the Swedish cash handling company posted results.
Shares of Siemens Gamesa Renewable Energy SA (SGRE.MC) surged 3.8% after results. The wind-turbine maker's sales were in line with expectations (http://www.marketwatch.com/story/siemens-gamesa-posts-loss-on-us-tax-hit-2018-01-30), but it posted a first-quarter net loss due to revamp and integration costs and U.S. tax reform.
Shares of Ryanair Holdings PLC (RYAAY) fell 2.2% after the discount airline and the British Airline Pilots' Association said they have struck an agreement (http://www.marketwatch.com/story/ryanair-makes-breakthrough-in-pilot-union-talks-2018-01-30) for the representation of cockpit crew. The deal is seen as a major breakthrough in Ryanair's talks with labor groups.
UBM PLC (UBM.LN) rose 4.3% on news of a 3.9 billion-pound ($5.47 billion) takeover offer (http://www.marketwatch.com/story/ubm-agrees-to-39-bln-takeover-offer-from-informa-2018-01-30)from Informa PLC (INF.LN) . Informa shares rose 0.9%.
What's on the economic docket?
An official preliminary estimate showed eurozone gross domestic product rose 0.6% in the fourth quarter, in line with forecasts.
The French economy, in particular, accelerated at its fastest pace in six years (http://www.marketwatch.com/story/french-economy-accelerates-at-fastest-in-6-years-2018-01-30), with gross domestic product climbing 1.9% in 2017 from 2016. Meanwhile, separate data showed French consumer spending dropped unexpectedly in December. (http://www.marketwatch.com/story/french-consumer-spending-falls-unexpectedly-2018-01-30)
(http://www.marketwatch.com/story/french-consumer-spending-falls-unexpectedly-2018-01-30)Spanish economic growth likely expanded by 0.7% in the fourth quarter of 2016 (http://www.marketwatch.com/story/spanish-economic-growth-slows-in-4th-quarter-2018-01-30), according to the country's national statistics agency, based on preliminary data. If confirmed, that will indicate a slight slowdown from 0.8% growth in the third quarter.
In Germany, inflation came in lower than expected in January (http://www.marketwatch.com/story/german-inflation-comes-in-lower-than-expected-2018-01-30), falling to 1.4% from 1.6% in December.
(END) Dow Jones Newswires
January 30, 2018 11:58 ET (16:58 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.