Escalating North Korea tensions dampens US markets

Rise of AfD in Germany causes DAX to trade lower; Ireland outperforms European markets

Germany’s Dax traded lower on Monday after German chancellor Angela Merkel secured a fourth term but saw her party weakened by a surge in support for the far-right. Photograph: Krisztian Bocsi/Bloomberg

Germany’s Dax traded lower on Monday after German chancellor Angela Merkel secured a fourth term but saw her party weakened by a surge in support for the far-right. Photograph: Krisztian Bocsi/Bloomberg

 

European shares rose on Monday after the euro weakened following the increase in support for the far-right Alternative für Deutschland (AfD) party in the German elections. The Dax was down on the day but Ireland traded up in line with the pan-European Stoxx Europe 600 index.

Meanwhile, in the United Kingdom losses in financials and commodities weighed on the FTSE while in the United States increased rhetoric from North Korea led to a sell-off in technology stocks.

Dublin

Ireland slightly outperformed wider European markets on the beginning of a new trading week that saw a weakening of the euro.

One of the biggest gainers on Ireland’s benchmark index was Aryzta, albeit on very light volume. In Zurich, where it is also listed, it traded up by 4.78 per cent after the market judged the news surrounding an impairment charge as positive considering the group didn’t have to raise capital.

On a day without considerable volatility in Ireland Ryanair again traded lower, although it did appear to be stemming its decline. The low-cost airline closed down by 0.52 per cent.

In line with European cement peers, CRH dropped on the day after having a good week on the stock market. The Iseq-heavyweight dropped by 0.51 per cent to €30.58.

Markets reacted positively to the news over the weekend that Tullow Oil was to resume drilling at its TEN project after the International Tribunal for the Law of the Sea ruled in favour of Ghana, where TEN is located, in a dispute with the Ivory Coast. The Irish-headquartered company closed up by 7.06 per cent in London.

London

The UK’s top share index pulled away from a one-week high on Monday as losses among heavyweight financials and commodities-linked sectors weighed.

Small cap Imagination Tech soared after a buyout fund agreed to buy the chip designer.

Falls among British financials such as HSBC, Barclays and Lloyds took the most points off the index as investors scaled back their exposure to risky assets.

Cyclical mining stocks also pulled back, with Rio Tinto, Anglo American and BHP Billiton all down more than 1 per cent due to a weaker copper price.

Oil heavyweights Royal Dutch Shell and BP reversed earlier losses after Brent crude oil prices rose to their highest level since July 2015.

Among individual stock moves, a price target cut from Jefferies weighed on shares in Mediclinic, which fell about 5 per cent, with analysts saying that they expected Mediclinic’s upcoming update to disappoint the market.

Europe

European shares rose slightly on Monday after German chancellor Angela Merkel secured a fourth term but saw her party weakened by a surge in support for the far-right.

The pan-European STOXX index rose 0.2 per cent to its highest level in about nine weeks, while Germany’s DAX index ended flat, just below a 10-week high hit on Friday.

Among top DAX gainers on Monday were Merck KGAA, Bayer and Deutsche Telekom but some carmakers and utility RWE fell on expectations of environmentally friendly policies under a new government with the Greens.

The German vote results didn’t appear to dampen investor enthusiasm about a possible cross-border merger between France’s Alstom and Siemens, which ended up 1.3 and 0.1 per cent respectively.

New York

US stocks fell sharply in late-morning trading on Monday after North Korea accused the US of declaring war and a selloff in technology stocks accelerated.

The five tech giants – Facebook, Amazon, Apple, Netflix and Alphabet – were down between 3.7 per cent and 1.05 per cent, weighing on the three major indexes.

General Motors rose after Deutsche Bank upgraded the automaker’s stock to “buy”, pointing to its autonomous vehicles, which could be ready for deployment within quarters.

Allergan was also up after the drugmaker authorised a $2 billion buyback of its shares and said its chief financial officer would retire.

–(Additional reporting: Reuters)