European stocks fall on rising U.S.-China tensions
by Barbara KollmeyerEuropean stocks fell Friday, with investors nervous ahead of a press conference by President Donald Trump over China as tensions rise between the countries, first over the coronavirus and now over Beijing’s fresh crackdown on Hong Kong.
Breaking a four-session win streak, the Stoxx Europe 600 index SXXP, -1.19% fell 0.8% after a gain of 1.6% on Thursday. For the week to Thursday, the index has gained 4.5% as investors have grown more hopeful that country reopenings will help to restart the global economy.
The German DAX DAX, -1.53% fell 1.2%, the French CAC 40 PX1, -1.26% dropped 0.8% and the FTSE UKX, -1.08% fell 0.7%.
The White House did not release any details on the Trump press conference coming later. Investors fear rising Sino-American tensions between the countries could seep into trade relations, creating more problems for a global economy that’s been battered by fallout from the coronavirus pandemic.
China has drawn the ire of several countries after passing legislation that could curtail Hong Kong’s democratic freedoms. U.S. Secretary of State Mike Pompeo to say Washington will no longer treat Hong Kong, already reeling from antigovernment protests and the pandemic, as autonomous from Beijing.
U.S. stocks fell into the closing bell on Thursday on Trump’s announcement, with the Dow industrials DJIA, -0.57% logging a 150-point loss. Dow futures YM00, -0.55% were last down over 200 points.
The auto sector, sensitive to signs of trade tensions, was under pressure. Shares of Renault SA RNO, -6.05% fell 3% after the French auto maker said it would eliminate more than 14,000 jobs over three years and slash production capacity to cut costs by more than 2 billion euros ($2.21 billion), due to fallout from the global pandemic.
“There is no denying that the automobile industry has been hit hard, and the bigger question is whether we will see a similar reaction from other car makers such as BMW and Mercedes-Benz,” said Naeem Aslam, chief market analyst at AvaTrade, in a note to clients.
Shares of BMW AG BMW, -2.46% fell over 2%, while Daimler AG DAI, -3.71% shares and Volkswagen AG VOW3, -3.83% shares fell 3% each.
AstraZeneca PLC AZN, +1.96% AZN, +1.84% shares rose 3% after the drugmaker said its Tagrisso lung-cancer drug “demonstrated unprecedented patient benefit” in a Phase III trial. In postsurgery patients with EGFR-mutated non-small cell lung cancer, Tagrisso cut the risk of the disease coming back or death by 83%, and 89% of those using it after two years alive and disease free.
Shares of Rolls-Royce Holdings PLC RR, -9.12% tumbled 6% after S&P Global Rating’s downgraded the engine maker’s credit rating to junk.
“Due to COVID-19’s impact on airlines, aircraft original equipment manufacturers (OEMs), and their supply chains, we now forecast that Rolls-Royce will exhibit materially lower engine sales, receive less cash from engine flying hour related invoices, and see subdued demand for aftermarket services through 2020 and 2021, at least,” said analysts David Matthews and Tuomas E Ekholm, in a press release.