Europe close: Stockmarkets end week on a down note
Stockmarkets across the Continent finished the week on a down note and near their session lows as investors digested news of a possible delay in trade talks between the leaders of the US and China and speculation that Washington might be set to slap tariffs on German cars.
Overnight, Donald Trump dialed back on expectations of a meeting with his Chinese counterpart, Xi Jinping, before a 1 March deadline for an increase in existing tariffs, first reportedly saying he would not meet him before that date but later adding that a meeting in the next month or so was possible, albeit not certain.
Nevertheless, other reports citing senior administration officials held out the possibility that the US deadline for the existing 10% tariff on Chinese imports to be raised to 25% might be extended so long as sufficient progress was being made in talks between the two economic blocks.
On a more positive note, strategists at Bank of America-Merrill Lynch told clients that for now the correct strategy remained to "buy the dip", while pointing out that European stocks had been one of investors' preferred investments since 2 January, alongside bonds and emerging market equities, even as US stocks were sold.
"The correct strategy in 2018 was "sell-the-rip"; Positioning, Policy, Profits and Populism argue the correct early 2019 trading strategy is to "buy-the-dip"; key lead indicators to monitor remain SOX, XHB, KOSPI…all are bullish; worry is yield curve still stubbornly flat & US retail XRT...breakdown below 50dma a tactical negative," they said.
They also argued that unlike in the late 1990s, private asset allocation was far from showing 'irrational exhuberance'.
By the end of trading, the benchmark Stoxx 600 was down by 0.56% or 2.01 points at 358.07, alongside a 1.05% or 115.24 point drop to 10,906.78 for the German Dax, while Italy's FTSE Mibtel was off by 0.65% or 126,42 points at 19,351.90.
Also weighing on investor sentiment, according to Wirtschaftswoche, the White House was looking at various options for imposing tariffs on cars made in the European Union, including tariffs of 10%, 25%, or more selective levies.
There were also reports making the rounds that the US President might be set to sign an executive order banning Chinese telecommunications equipment manufacturers from US wireless networks before an industry conference in Barcelona at the end of the month.
Corporate updates on the Continent were mixed.
To the upside, French luxury handbag maker, Hermes, reported continued strong sales at its Chinese stores over the fourth quarter, while Loreal beat analysts' estimates for sales over the latest three-month stretch.
Shares of Belgian chemicals outfit Umicore on the other hand were under pressure after telling investors it expected a negative impact on its 2019 numbers from soft demand for cars and consumer electronics.
Meanwhile, forecasts for a loss out of Tata's Jaguar Land Rover unit were weighing on sentiment towards the wider sector.
French industrial production rose by 0.8% month-on-month in December (consensus: 0.6%), INSEE reported, although data for November were revised lower.
In Italy on the other hand, at down by 0.8% on the month for December, industrial output fell short of forecasts calling for an increase of 0.4%.