Yuan move hits luxury-goods shares
Carmakers, miners and luxury-goods shares led a drop in European stocks yesterday after China devalued its currency by the most in two decades.
BMW and Daimler slid 4.3pc or more, while LVMH Moet Hennessy, Louis Vuitton and Swatch Group slipped at least 5.1pc amid concern the yuan's drop will hurt sales in China.
By the close in Dublin, the ISEQ Overall Index was down 0.54pc or 35.44 points to end the trading session at 6,551.89.
The leaders on the Dublin market included speciality baker Aryzta, which increased 0.1pc to €47, while bookmakers Paddy Power rose 0.4pc to €80.33.
On the other side of the board, the laggards included packaging giant Smurfit Kappa, which fell 1.6pc to €27.35, while fruit company Fyffes dropped 1.3pc to €1.44.
The Stoxx Europe 600 Index slid 1.6pc to 393.61 at the close of trading, taking its decline since a peak last week to 2.6pc. China's central bank cut its daily reference rate for the yuan, triggering the currency's biggest one-day drop since 1994. "It's logical that Europe's main exporters, like German automakers and luxury, move down significantly because it will be more difficult for these companies to sell in China," said Francois Savary, a Geneva-based investment officer. "Equity investors need to factor in the currency move into their models."
All Stoxx 600 industry groups fell. Germany's DAX Index slid 2.7pc for the worst performance among western-European markets. Greece's ASE Index rose the most, up 2.1pc.
The country and its creditors agreed on terms for its third bailout, paving the way for national parliaments to vote on the deal before a payment deadline next week.
The ASE has gained 9.6pc since an almost three-year low last week. Among shares moving on corporate news, Delta Lloyd tumbled 20pc after reporting a drop in solvency ratio, a measure of the insurer's ability to absorb losses.