Wednesday 21 November 2018

Trade tensions push stocks lower

Traders work on the floor of the New York Stock Exchange (NYSE) in New York. Photo: Reuters
Traders work on the floor of the New York Stock Exchange (NYSE) in New York. Photo: Reuters

Reuters

European shares slid again yesterday as China's retreating yuan exacerbated trade tensions and encouraged investors to sell risky assets and search for stock market safe havens.

After clawing back some ground on Wednesday, the pan-European STOXX 600 and Germany's trade-sensitive DAX were down 0.9pc and 1.4pc respectively, with technology and car-makers taking the biggest hits.

The ISEQ was 0.90pc lower at 6,953, with declines led by CRH and Ryanair.

"Investors are cashing in on yesterday's gains, as trade tensions remain alive and well," wrote David Madden, an analyst for CMC Markets, adding that a lasting recovery for stocks was unlikely without tangible progress on trade negotiations.

Tech stocks were the worst performers, falling 2.6pc as concerns over tariffs spread to a sector thus far considered relatively resilient to trade disruptions.

Chipmakers STMicro, Infineon and ASML were among the biggest decliners, falling 5.1pc, 4.2pc and 2.9pc respectively.

Asian tech stocks had sold off overnight after threats from US President Donald Trump to curb Chinese investment in US tech firms. The automotive sector index fell 2.4pc as a profit warning from lighting firm Osram renewed anxiety over auto tariffs and their impact.

Osram plunged over 20pc after it said restrictions on trade and sales affecting automotive manufacturers had created "noticeable uncertainty".

"The trade tariff pain is clearly starting to come to the fore in companies connected to autos," one trader wrote.

A rare bright spot was high dividend-paying consumer staples stocks, including Nestle and Unilever, seen as safer in times of market stress.

Irish Independent

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