Monday, December 10, 2018

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European stocks retreated Thursday morning, amid fears of a fresh flare-up in tensions between the world’s two largest economies.

Stoxx 600 fell more than 2.2 percent during mid-morning deals, with all and major bourses sectors in negative territory.


Market focus is largely attuned to the arrest of a top executive at Chinese tech giant Huawei, amid investor concern that the news could derail progress in U.S.-Sino trade talks.

Europe’s basic resources stocks — with their heavy exposure to China — tumbled more than 3.3 percent during mid-morning deals. Britain’s FTSE 100 index slumped to its lowest level in two years Thursday morning, as mining stocks plummeted. London-listed Antofagasta and Glencore led the sectoral losses, down more than 5 percent.

Meanwhile, autos stocks — seen as a trade war proxy because of the sector’s export-heavy constituent’s — were also among the worst performers, down nearly 3 percent. Faurecia, Valeo and Daimler all dropped more than 3 percent.

Tech stocks were also over 3 percent lower Thursday morning, following the arrest of Huawei’s global chief financial officer in Vancouver on Wednesday. Meng Wanzhou, the daughter of Huawei’s founder, was arrested by Canadian authorities on December 1, reportedly over the possible violation of sanctions against Iran. She now faces extradition to the United States.

Looking at individual stocks, Italy’s DiaSorin tumbled toward the bottom of the European benchmark Thursday morning, after Kepler Cheuvreux cut its stock recommendation to “hold” from “buy.” Shares of the Milan-listed company were down more than 7 percent on the news.

Trade tensions

Wanzhou’s arrest has sparked concern of a major collision between the U.S. and China, at a time when both economic powers were set to begin three months of negotiations aimed at de-escalating their global trade war.

The U.S. and China had agreed to temporarily hold off on imposing additional charges against each other’s goods over the weekend. President Donald Trump and President Xi Jinping‘s trade truce prompted global stocks to surge higher at the start of the trading week, but fading optimism over the political deal has since pared equity market gains.

In Asia, MSCI’s broadest index of Asia-Pacific shares, excluding Japan, fell almost 2 percent on Thursday.

Stateside, stock markets are set to re-open after traders observed a national day of mourning for President George H. W. Bush on Wednesday.

Back in Europe, market participants are likely to closely monitor a much-anticipated meeting between OPEC and non-OPEC members in Vienna, Austria on Thursday and Friday. The 15-member group and its allied partners are widely expected to impose steep output restrictions from January, in order to prop up tumbling oil prices.


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