Europe open: Stocks drop amid escalating trade tensions; H&M bucks trend
European stocks edged lower in early trade on Monday, with sentiment undermined by escalating trade tensions between the US and China as Trump prepares to slap tariffs on another $200bn of Chinese goods.
At 1045 BST, the benchmark Stoxx Europe 600 index was down 0.2% to 377.00, Germany's DAX was 0.5% lower at 12.064.50 and France's CAC 40 was down 0.4% at 5,331.96.
According to the Wall Street Journal, Trump has instructed aides to press ahead with tariffs of 10% as early as Monday, while Beijing is considering declining the US administration's offer of negotiations alter this month.
IG market analyst Joshua Mahony said: "It has come as no surprise to see the week kick off in a downbeat fashion, for the tentative optimism surrounding the potential of a fresh round of trade negotiations between the US and China. A year of weather extremes has kept markets there on edge, and Asian markets certainly reflected the force with which the Chinese and Hong Kong costs have been battered by Typhoon Mangkhut.
"With the Chinese economy already facing the headwinds of slowing exports, weather-related damage has provided an unwelcome distraction, with threat to life and infrastructure. Unfortunately for market bulls, the US-China trade conundrum has shown little signs of going away, for even with trade talks being planned, we have seen precious few signs that either side will be willing to back down."
In corporate news, Swedish fashion retailer H&M surged as its third-quarter sales beat expectations, while supermarket retailer Casino gained ground after saying it has secured €500m in bank funding to strengthen its financial position.
Credit Suisse ticked lower after Switzerland's financial regulator, Finma, said the lender had failed to combat money laundering in suspected corruption cases linked to FIFA and Venezuelan and Brazilian state oil companies.
On the macro front, figures from Eurostat revealed that inflation in the eurozone fell to 2% year-over-year in August from 2.1% in July, in line with consensus and the initial estimate. Meanwhile, the core rate slipped 0.1 percentage points to 1.0%, also in line with the initial estimate.
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said: "The fall in core inflation was driven by weakness in both services and non-energy goods inflation, though the latter was revised slightly higher, to 0.4%. Volatility in package holiday prices and a sharp decline in German school fees were the primary drivers of the fall in services inflation, and we expect a rebound in coming months.
"In non-energy goods, inflation remains below the rate implied by the PPI index, and the recent decline in commodity prices point to downside risks in the first half of next year. We still think, however, that goods CPI inflation will increase in coming months."