👀 Copy Legendary Investors' Portfolios in One ClickCopy For Free

Growth angst and oil slide take European shares to two-week low

Published 11/14/2018, 05:51 AM
© Reuters. The German share price index DAX graph at the stock exchange in Frankfurt
UK100
-
IT40
-
BARC
-
DBKGn
-
WDIG
-
ILD
-
MFEB
-
HG
-
FTITLMS3010
-
STOXX
-
SXEP
-
SXPP
-
ADYEN
-

By Julien Ponthus and Helen Reid

LONDON (Reuters) - European shares hit their lowest in two weeks on Wednesday as data showing the German and Japanese economies contracting in the third quarter fueled worries about global growth amid a plunge in oil prices.

The pan-European STOXX 600 (STOXX) lost 0.5 percent by 0900 GMT as commodities sectors weighed and Italian stocks sold off.

The STOXX and leading euro zone stock indexes <.STOX50E> hit their lowest since Oct 31 in early deals, recovering some ground later.

Italy's decision to stick to its growth and deficit plans in its re-submitted draft budget set the stage for a showdown with the European Union over breaking structural deficit limits.

It drove government bond yields up and sent Italy's FTSE MIB (FTMIB) down 1.8 percent, set for its worst fall in a month, as bank stocks (FTIT8300) fell 1.5 percent.

The oil and gas sector (SXEP) sank 2.3 percent, causing it to cede its position as top-gaining sector year-to-date to healthcare.

Energy stocks have been one of the biggest contributors to the region's earnings growth this quarter, making the slide a significant concern for investors.

Crude prices were struggling to find a footing after a 7 percent plunge the previous day on surging supply.

In London, the FTSE 100 (FTSE) fell as Prime Minister Theresa May sought to convince her government to accept a draft European Union divorce deal that opponents say threatens the independence and unity of the United Kingdom.

Mining stocks (SXPP) fell 2.7 percent as copper prices slid after weak China retail sales data reignited fears of a slowdown in the world's biggest metals consumer.

Dutch payments firm Adyen's (AS:ADYEN) shares lost 9.5 percent as traders said the stock had been left out of an MSCI index re-weighting, and was also being dragged down by Wirecard (DE:WDIG) which fell after results.

" Adyen didn't get included into the MSCI re-weights, which a lot of people were thinking they might, so there's some technical selling driving it," said Mark Taylor, sales trader at the Mirabaud Securities Global Thematic Group.

Wirecard shares fell after the firm hiked its profit target and reported a jump in third-quarter net earnings. Traders said the market was honing in on details in its free cash flow, and signs of slowing inorganic growth.

Iliad (PA:ILD) shares were among top gainers, up 7.1 percent after results showed good performance in the company's Italian unit, though overall it lost subscribers.

Overall European earnings have been underwhelming this season, revealing growing margin pressure and concerns about growth and a slowdown in China.

"For 2019, we forecast low-single-digit and below-consensus EPS growth in Europe," wrote Barclays (LON:BARC) analysts.

They see earnings per share growing at 4 percent in the euro zone and 2 percent in the UK next year - significantly lower than the aggregate IBES Refinitiv estimates for around 10 and 8 percent respectively.

© Reuters. The German share price index DAX graph at the stock exchange in Frankfurt

Mediaset (MI:MS) shares fell 7.6 percent, the heaviest fallers on the Italian index, after third-quarter earnings delivered a small beat, but Deutsche Bank (DE:DBKGn) analysts said consensus estimates were more likely to fall than rise.

(Julien Ponthus and Helen Reid; Editing by Peter Graff)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.