Europe: China jitters, earnings drag Stoxx 600 to three-month low
EUROPE’S main index plunged 2 per cent to a near three-month low on Tuesday, as concerns over the fate of US-China relations cast a shadow over stocks with significant exposure to the world’s No. 2 economy, while some downbeat earnings also weighed.
The Stoxx 600 also notched its steepest one-day decline since early August after Monday’s 1 per cent jump.
European equities have been under stress as investors assessed the likelihood of tariff increases after Trump’s sweeping US presidential victory last week.
China-related assets struggled globally as Trump is expected to tap US Senator Marco Rubio to be his secretary of state, who has in past years advocated for a muscular foreign policy with respect to America’s geopolitical foes, including China.
“As he’s forming his teams and the names are coming through, the market is having a realization of what could be coming,” said Fiona Cincotta, senior market analyst at City Index.
“China’s economic position is quite fragile and if you’re having huge tariffs being placed on China when it’s already weak, that’s going to impact its imports and that will naturally affect Europe.”
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Basic resources slumped 3.7 per cent as most metal prices fell, with Polish miner KGHM dropping 9.2 per cent and one of the worst-hit on the Stoxx 600.
Personal and household goods, which houses heavyweight China-exposed luxury firms, dropped 2.4 per cent. The broader luxury index was also down nearly 4 per cent.
However, the technology sector was largely flat in the face of deep sectoral losses, driven by a 4 per cent jump in Temenos following the Swiss banking-software company’s strategic plan to accelerate growth over four years.
Among earnings-driven losses, German group Bayer slumped 14.5 per cent after warning weak agricultural markets could dent its earnings further next year.
Brenntag eased 5 per cent after the German chemicals distributor reported a third-quarter core profit miss, dragging the chemicals sector 3 per cent lower.
Italy’s Mediobanca dropped 8.2 per cent after cutting its full-year net interest income forecast.
UK’s Convatec Group jumped 22 per cent after the medical products and technologies firm raised its FY24 organic sales growth forecast.
Infineon reversed course to rise 4 per cent after falling initially, as the German chipmaker forecast lower 2025 revenue due to weak demand in its end markets aside from AI.
Meanwhile, German inflation rose to 2.4 per cent in October, confirming preliminary reading, with investor morale clouded this month amid Trump’s win and collapse of the Berlin government.
A US inflation reading and minutes from the European Central Bank’s last policy meeting are due later in the week. REUTERS
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