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EUROPE MARKETS: European Stocks End Lower For 6th Straight Session, Hit By Stronger Euro, China Worries

14/11/2017 5:26pm

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By Carla Mozee and Victor Reklaitis, MarketWatch

Shared currency rises after stronger-than-expected German GDP reading

European stocks closed lower for a sixth session in a row Tuesday, hurt as the euro leapt to a three-week high on the back of stronger-than-expected economic growth figures from the eurozone, while miners shares slumped on worries about growth in China.

What markets are doing: The Stoxx Europe 600 fell by 0.6% to end at 383.86, registering its lowest close since Sept. 22, FactSet data showed.

The DAX 30 index declined 0.3% to close at 13,033.48, and France's CAC 40 gave up 0.5% to finish at 5,315.58.

The U.K.'s FTSE 100 shed less than 0.1% to close at 7,414.42, giving up earlier gains, and Spain's IBEX was down 0.6% at 9,990.40, notching its first close below 10,000 since early October.

The euro traded at $1.1768, rising from $1.1669 late Monday in New York.

What's driving markets: As Chinese companies are major buyer of industrial and precious metals, mining shares were pushed lower Tuesday following data that showed the country's industrial output slowed in October (http://www.marketwatch.com/story/china-industrial-output-slows-in-oct-as-expected-2017-11-13). Also, housing sales fell and construction starts slowed. (http://www.marketwatch.com/story/china-housing-sales-slow-year-over-year-in-october-2017-11-13)The Stoxx Europe 600 Basic Resources Index tumbled 2.7%.

At the same time, the euro climbed above $1.1700 for the first time since Oct. 26, putting the shared currency up by roughly 1% just two days into this week.

Strength in the euro puts pressure on shares of European exporters, as it makes their products more expensive for holders of other currencies. On the German index, shares of Volkswagen AG (VOW.XE) (VOW.XE) pulled 1% lower and BMW AG (BMW.XE) fell 0.1%.

Investors bumped up the euro after government statistical office Destatis said gross domestic product in Germany, Europe's largest economy, rose by 3.3% in the third quarter (http://www.marketwatch.com/story/german-gdp-grows-33-outstripping-forecasts-2017-11-14), outstripping expectations for 2.4% growth. Also, Italy's annualized growth of 1.7% (http://www.marketwatch.com/story/germany-italy-add-impetus-to-eurozone-recovery-2017-11-14) was the largest since the first quarter of 2011.

Read:The strong euro is just a quarter of the battle for Italy in 2018 (http://www.marketwatch.com/story/the-strong-euro-is-just-a-quarter-of-the-battle-for-italy-in-2018-2017-11-13)

Meanwhile, the dollar was dragged by ongoing worries about delays in passage of corporate tax proposals into law in Washington. The prospect of lower U.S. taxes has helped drive up equity markets world-wide over the past year, including bank stocks. The Stoxx Europe 600 Bank Index fell 0.8%.

What strategists are saying: Deutsche Bank on Tuesday downgraded German equities to underweight from overweight, saying they've outperformed the European benchmark by 6% since its upgrade in mid-August.

Among other factors driving the downgrade,German equities' prices no longer look too low relative to the trajectory suggested by euro-area PMI momentum, Deutsche Bank European equity strategist Wolf von Rotberg wrote in a research note.

Stock movers: Infineon Technologies AG (IFX.XE) jumped 2.7% on the DAX 30. The chip maker's net profit for the fourth quarter fell 22% (http://www.marketwatch.com/story/infineon-net-profit-down-22-on-weaker-dollar-2017-11-14) as the company faced a strong headwind from dollar depreciation.

Henkel AG & Co. (HEN.XE) dropped 4.3% after the company said third-quarter net profit fell to 564 million euros (http://www.marketwatch.com/story/henkel-profit-falls-on-fx-effects-raises-forecast-2017-11-14)($657.4 million) from EUR576 million a year ago. The maker of Dial soap and Purex laundry detergent raised its forecast for adjusted earnings.

Tesco shares (TSCO.LN) climbed 6.2% after the U.K. Competition and Markets Authority provisionally cleared a merger between the supermarket chain and wholesaler Booker Group (BOK.LN). Booker's shares, which trade off the FTSE 100, climbed 6.8%.

Vodafone (VOD.LN) (VOD.LN) jumped 5.1% after the telecom raised its outlook for fiscal 2018 (http://www.marketwatch.com/story/vodafone-pretax-profit-up-55-lifts-2018-outlook-2017-11-14), with pretax profit for the first half rising 55% year-over-year.

Economic data: U.K. inflation came in at 3% in October (http://www.marketwatch.com/story/uk-inflation-stays-at-5-year-high-of-3-2017-11-14), slightly below expectations for a 3.1% print.

 

(END) Dow Jones Newswires

November 14, 2017 12:11 ET (17:11 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.

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