Rising euro puts exporters under pressure; miners fall
European stocks declined Friday, with euro strength and geopolitical worries driving broad-based losses, pushing the regional benchmark deeper into the red for the week.
The Stoxx Europe 600 index fell 0.4% to 373.55. No sector traded higher. On Thursday, the benchmark finished up by 0.3%, aided by upwardly revised growth figures for the eurozone economy. For the week, the index was on track to drop 0.7%, which would be its second loss in three weeks.
“European stock markets are under the pressure of … global risk-off trades,” said Ipek Ozkardeskaya, senior market analyst at London Capital Group, in a note.
The analyst said investors will be watching North Korea, which is feared to be ready to launch another missile on Saturday (http://www.marketwatch.com/story/north-korea-is-getting-ready-for-another-possible-icbm-launch-says-south-korea-2017-09-04) as it celebrates the country’s Foundation Day. Another worry is Hurricane Irma, which could make landfall in Florida on Sunday.
Read:Hurricane Irma set to squeeze a lot more than just Florida’s oranges (http://www.marketwatch.com/story/hurricane-irma-set-to-squeeze-a-lot-more-than-just-floridas-oranges-2017-09-07)
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In addition, a powerful earthquake in Mexico (http://www.marketwatch.com/story/huge-81-earthquake-hits-mexico-leaves-at-least-5-dead-2017-09-08) ahead of the European trading session was dampening investors’ enthusiasm, Ozkardeskaya said.
Insurance shares were sliding Friday on the headlines. They were already trading lower after Hurricane Harvey hit the U.S. Gulf Coast two weeks ago, causing up to $190 billion in damage, according to an AccuWeather estimate.
Swiss Re (SSREY) fell 1.1%, and Hiscox Ltd. (HSX.LN) was down 0.9%.
Ozkardeskaya noted investors’ flight to assets seen as safe havens was weighing on the U.S. dollar.
“The risk-off [mood] drives capital from stocks to sovereign bonds, Swiss franc, yen and gold. … [the] Chinese yuan also gained on the back of an aggressive selloff in the U.S. dollar,” she said.
Euro in focus: That dollar selloff was pushing the euro higher Friday. The shared currency traded at $1.2056, up from $1.2024 late Thursday in New York.
The euro leapt above $1.20 on Thursday after European Central Bank President Mario Draghi said policy makers will re-assess the bank’s bond-buying program this autumn.
See:4 takeaways from ECB President Mario Draghi’s news conference (http://www.marketwatch.com/story/4-takeaways-from-ecb-president-mario-draghis-news-conference-2017-09-07)
Euro strength can put pressure shares of European exporters, as it can hurt revenue and earnings prospects for those companies.
Miners lose ground: Mining shares sagged after growth in Chinese exports slowed in August, to a rate of 5.5%, raising concern about softening of global demand. Mining shares can be sensitive to Chinese economic data as the world’s second-largest economy is a key buyer of industrial and precious metals.
In the group, shares of copper producer Antofagasta PLC (ANTO.LN) fell 1.1% and BHP Billiton PLC (BLT.LN) shed 1.2%.
Stock movers: Greene King PLC (GNK.LN) shares tumbled 12% after the pub chain operator warned of tougher trading conditions (http://www.marketwatch.com/story/greene-king-sales-fall-on-food-challenges-2017-09-08) after sales fell in its “value food” business. It flagged a drop in consumer confidence in the economy as wages stagnate.
Akzo Nobel NV (AKZOY) lost 1.6% after the Dutch paint maker said Chief Financial Officer Maelys Castella is stepping down because of health reasons (http://www.marketwatch.com/story/akzo-nobel-cfo-to-step-down-for-health-reasons-2017-09-08).
National indexes: France’s CAC 40 index was off 0.2% 5,106.90, and in London, the FTSE 100 shed 0.2% to reach 7,379.44.
But Germany’s DAX 30 index was fighting back from an earlier loss, rising 0.1% to 12,312.23.
Data: French industrial production rose by a less-than-expected 0.5% (http://www.marketwatch.com/story/french-industrial-output-rises-less-than-expected-2017-09-08) in July as agricultural and oil refining output contracted, said statistics agency Insee said.
Imports to Germany surged in July, (http://www.marketwatch.com/story/german-imports-surge-as-exports-tick-higher-2017-09-08) a sign that domestic demand continues to drive the upswing of Europe’s largest economy. Total goods imports rose 2.2% from June.
U.K. manufacturing picked up (http://www.marketwatch.com/story/uk-industrial-output-increased-modestly-in-july-2017-09-08) in July, official figures showed Friday, but overall industrial output fell short of analysts’ expectations, suggesting that the economy rebounded only moderately as it entered the third quarter.
(END) Dow Jones Newswires
September 08, 2017 06:10 ET (10:10 GMT)