EUROPE MARKETS: Trump Trade Spat Sinks Europe Markets

By Dave Morris

U.S. President Donald Trump sent markets in Europe and elsewhere into a tailspin with new, pessimistic comments on trade negotiations with China.

How did markets perform?

The Stoxx 600 sank 0.9% to 378.76, resuming its decline after taking a breather Wednesday and rising 0.2%.

The U.K.'s FTSE 100 was down 0.4% to 7,243.36. It had ticked up 0.2% Wednesday.

The pound edged 0.1% lower to $1.2998, after dipping 0.4% Wednesday.

France's CAC 40 plunged 1.2% to 5,354.3 following Wednesday's rebound of 0.4%.

In Germany, the DAX (DAX) dropped 0.9% to 12,068.28. On Wednesday it had climbed 0.7%.

Italy's FTSE MIB fell 1.1% to 20,957.44, adding to Wednesday's slip down 0.1%.

What's moving the markets?

"China broke the deal," U.S. President Donald Trump told supporters at a rally in Florida, setting the latest round of trade talks between the two economic superpowers off on a sour note. In a tweet, (https://twitter.com/realDonaldTrump/status/1126106540015071232) Trump said Chinese negotiators were hoping they could eventually work with one of the field of Democratic presidential candidates "and thereby continue to ripoff [sic] the United States".

The Wall Street Journal reported (https://www.wsj.com/articles/why-china-decided-to-play-hardball-in-trade-talks-11557358715) that Chinese officials viewed Trump's urging of the Federal Reserve to cut interest rates as a sign that the U.S. economy was weaker than previously thought. Chinese Vice Premier Liu He and his delegation resume negotiations Thursday in Washington, D.C..

China's latest economic data was mildly disappointing. New loans in April at 1.02 billion yuan came in below both expectations (1.2 billion yuan) and the previous month (1.69 billion). Analysts pointed to the continuing shrinking of the shadow banking sector, but added that focus would now shift to possible stimulus counteracting new U.S. trade tariffs.

Brexit news showed signs of picking up again as U.K. Prime Minister Theresa May reportedly intends to reintroduce her thrice-defeated European Union withdrawal agreement in the U.K. parliament for a vote before EU parliamentary elections occur May 23. The Times reported (https://www.thetimes.co.uk/edition/news/defiant-theresa-may-wants-new-votes-on-brexit-deal-before-eu-poll-5wkwcbd6q) that the Prime Minister viewed reintroducing the bill as preferable to doing nothing, while many in her ruling Conservative party continued to push for her to announce a date when she would step down.

Which stocks are active?

Heavily weighted HSBC Holding PLC (HSBA.LN) (HSBA.LN) slid 1.6%, weighing on the overall Stoxx Europe 600. The banking sector as a whole was under pressure, with Swedbank AB (SWED-A.SK) dropping 1.4%.

U.K. telecommunications company BT Group PLC (BT.A.LN) confirmed it would keep its dividend steady in its full-year earnings report, even as it pledged to spend more to increase the number of fiber optic lines it would install. Shares fell 0.9%.

"This may be a silver lining masking a cloud -- without deeper investment BT risks trouble further down the line. One wonders if new CEO Philip Jansen has not been bold enough," Neil Wilson, chief market analyst for Markets.com.

Deutsche Telekom AG (DTE.XE) was stung by restructuring and merger costs from the T-Mobile-Sprint tie-up, leaving its net profit for the first quarter down 9% year over year. Behind the headline figures there are reasons for optimism, as the German telecoms company saw growth in its various business lines, and management backed their full year guidance for 2019. Shares edged down 0.1%

WM Morrison Supermarkets PLC (MRW.LN) produced a slightly disappointing set of first quarter results, citing competitive pressures. Its same store retail sales came in at 0.2%, below analyst consensus of 0.5%. The company also announced it was ending its exclusive agreement with online grocery delivery company Ocado. Morrison's share price declined 0.6%.

(END) Dow Jones Newswires

May 09, 2019 08:36 ET (12:36 GMT)

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