European stocks ended slightly lower Tuesday, dogged by concerns about the global trade picture.
What are markets doing?
The Stoxx Europe 600 SXXP, +0.50% fell 0.1% to end at 375.31, after a gain of 0.4% on Monday. The index fell 2.2% last week, and is down 3.6% year-to-date.
Germany’s DAX 30 DAX, +0.57% pared early losses to end 0.1% lower at 11,970.27, while France’s CAC 40 PX1, +0.80% rose 0.3% to 5,283.79. The U.K.’s FTSE 100 UKX, +0.12% fell 0.1% to 7,273.54.
The euro EURUSD, -0.1465% gave up some gains in the afternoon, dipping to $1.1584 from $1.1594 late Monday in New York, while the pound GBPUSD, -0.0460% also surrendered some ground, buying $1.3021 from $1.3025.
What is driving the market?
European stocks tracked losses for U.S. stock futures, which fell after a report that China plans to seek permission from the World Trade Organization to impose sanctions on the U.S. The move is related to a long-running trade dispute that goes back to 2013. However, some fear such a move could further amplify U.S.-China trade tensions. But Europe continued to take a cue from the U.S., trimming losses as U.S. equities attempted to turn higher.
London stocks remained weak even as the pound backed away a bit from its strong start to the week. The pound shot higher Monday on hopes that a Brexit deal could be agreed to within six to eight weeks, with that action continuing into Tuesday’s session. A stronger pound can weigh on the FTSE 100, as the index’s multinational companies generate most of their sales in other currencies.
This Brexit timeline estimate came from European Union chief negotiator Michel Barnier at a conference in Slovenia and helped soothe investor fears that the U.K. could part ways with Europe’s big trade bloc in March 2019 without an agreement in place. But Barnier also said several issues still needed to be worked out.
Mark Carney will remain governor of the Bank of England through January 2020, U.K. Chancellor of the Exchequer Philip Hammond told lawmakers Tuesday. Carney had been due to step down in June 2019. Carney had been asked to stay to help provide stability as the U.K. moves through the Brexit process.
Two economic updates in Europe largely went unnoticed. The first showed employment gains in the U.K. slowed in the three months through July. The other revealed Germany’s ZEW survey of economic expectations, rising for the second straight month, though from a modest level.
What are analysts saying?
All equity markets are likely to see pressure as traders wait for fresh developments on the trade spat, said James Hughes, chief market analyst at Axi Trader, in a note to clients. He said some are suggesting the China news is “a precursor to the imminent U.S. tariffs on Chinese imports. The news is breaking now so the response from Washington in the next few hours will be closely followed.”
Amer Sports Oyj AMEAS, -0.23% was the biggest gainer in the Stoxx Europe 600, shooting up nearly 19% after the sporting goods company said it has received a nonbinding preliminary indication of interest from Hong Kong-based Anta Sports Products Limited 2020, -9.15% and Asian private-equity firm FountainVest Partners.
Shares in Ashtead Group PLC AHT, -0.32% jumped 5.2% after the industrial equipment rental company said it would expand its share-buyback program after posting a 20% gain for first-quarter pretax profit.
ArcelorMittal SA MT, +1.79% slipped 2%. The steel manufacturer reportedly lifted its offer for India’s Essar Steel India Ltd. to about 420 billion rupees ($5.8 billion), according to Bloomberg, which cited sources.