European, US stock markets hit pause at start of big week
NEW YORK: European and US stock markets eased on Monday at the start of a key week for China-US trade hopes and ahead of Britain’s general election.
The dollar wobbled against its main rivals ahead of the final monetary policy meeting of the year of the Federal Reserve.
Meanwhile, sterling drifted higher awaiting Thursday’s UK election that is expected to see Prime Minister Boris Johnson’s Conservatives win a big enough majority to push through his Brexit deal.
“In a week to remember, it was a session to forget,” said Connor Campbell, analyst at Spreadex trading group, adding that investors were “not unjustified in their reticence to act.”
While observers widely expect Beijing and Washington to hammer out a partial tariffs agreement, trading floors remained nervous places with less than a week until the United States is due to impose fresh levies on Chinese goods.
“Though Wednesday has the final Fed statement of the year, it is going to be hard for American investors — and investors in general — to wrench their attentions away from the state of play between the US and China heading into Sunday’s tariff deadline,” said Campbell.
“So pressing is that matter that Thursday’s UK general election is more of a local sideshow than the week’s big macro event,” he added.
On the corporate front Monday, shares in Tullow Oil, a London-listed independent oil producer in Africa, plummeted by 71 percent after the company cut its production forecast, froze dividend payments and its CEO resigned.
Shares in British supermarket giant Tesco topped the gainers board for London’s blue chip FTSE 100 index, having shot up 4.5 percent after Britain’s biggest retailer said it was looking at exiting its Thai and Malaysian businesses.
Sanofi stock shed two percent after the French pharmaceutical giant said it had agreed to buy US biotech firm Synthorx, boosting its immuno-oncology portfolio.
ArQule, which has been developing cancer medications, more than doubled after it agreed to be acquired by Merck for $2.7 billion. Merck dipped 0.2 percent.
In the commodities markets, oil prices retreated on profit-taking after Friday’s healthy gains on the decision by OPEC and non-cartel producers led by Russia to cut output by a further 500,000 barrels a day.
Downbeat Chinese trade data over the weekend also gave reason to sell as it reminded traders that slowing growth is why oil producers are cutting output.
Meanwhile, European stock markets slumped Tuesday and the dollar faltered, dragged down by nervousness surrounding China-US trade talks with less than one week until Washington was due to impose fresh tariffs on Chinese goods.
London was hit additionally by official data showing the UK economy flattened in October after contracting the previous two months.
But sterling hit an eight-month high at $1.3190, one day after reaching a 2.5-year peak versus the euro. The British currency remains well supported going into the final straight of the UK general election Thursday, with Prime Minister Boris Johnson’s Conservatives tipped to win a majority that will help him drive through his Brexit deal.
Regarding European equities, “the Sunday deadline for further US tariffs on Chinese goods has dragged stock markets lower, with an underwhelming set of UK data… further hindering sentiment”, said Joshua Mahony, senior market analyst at IG trading group. Major Asian indices closed little changed on Tuesday. (AFP/APP)