European stocks dive to two-month lows on China worries

Stock markets around the world fell hard and the Chinese yuan weakened to an 11-year low on Monday as fears of an escalation in the US-China trade war jolted financial markets.

European shares sank to a two-month low with the pan-European STOXX 600 index falling 2.3 per cent. Taking into account Friday’s losses, this made it the biggest two-day drop in more than three years as traders dumped shares in favour of perceived safe-havens like government bonds.

DUBLIN

The Dublin market was open for business but there was little in the way of activity given the bank holiday.

The Iseq followed other indices lower, closing down 2.8 per cent to 5809.55 points with most stocks ending in the red.

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Heavyweight CRH was among those in decline, ending the day down almost 3 per cent. Smurfit Kappa was 4 per cent lower, while Ryanair was down 3 per cent and Flutter down 4.6 per cent.

Banks were all negative with Bank of Ireland 1.4 per cent lower and AIB closing down 3 per cent.

Food companies also slipped into the red with Kerry down 4 per cent and Total Produce losing close to 6 per cent.

LONDON

The FTSE 100 shed 2.5 per cent in its worst day since early December, while the mid-cap FTSE 250 sank 2 per cent and hit its lowest level in two months.

Precious metals miner Fresnillo added 4.7 per cent and was the only blue-chip stock that closed in the black. Retailer Marks & Spencer and online supermarket Ocado fell 5.1 per cent and 4.6 per cent respectively, following their online food venture deal that will result in the termination of Ocado's current deal with Waitrose.

Taylor Wimpey dropped 5.2 per cent after multiple brokerages cut their price target on the stock after the housebuilder's downbeat results and margin warning last week.

Providence Resources was one of the big losers of the day, down over 34 per cent after it reported it was running low on funds.

EUROPE

Mining groups Rio Tinto and BHP fell more than 2 per cent in trading on Monday, while steel producer ArcelorMittal lost more than 4 per cent as Beijing allowed the yuan to breach 7-per-dollar, making copper and iron more expensive in their biggest global market.

Luxury stocks such as Louis Vuitton owner LVMH and watchmakers Richemont and Swatch, which derive a large part of their revenue from China, gave up between 3.9 per cent and 6.8 per cent.

Software company SAP was among the biggest decliners on the STOXX 600, while chipmakers AMS, Infineon and STMicroelectronic also fell.

NEW YORK

Wall Street’s main indexes fell sharply in early trading on Monday, with the Dow Jones Industrial Average tumbling more than 500 points, as China’s willingness to let the yuan slide in response to the latest US tariff threat fanned fears that it could further aggravate an ongoing trade war.

The sell-off was broad, with all the 11 major S&P sectors in the red. The S&P technology sector, heavily exposed by its chipmakers and other global technology players to Chinese markets, dropped 3.2 per cent.

Apple slid 4.1 per cent as analysts warned that the newly proposed tariffs may hurt demand for its flagship iPhone.

Shares of the biggest video-game makers tumbled on Monday after president Donald Trump blamed the industry for contributing to a culture of violence in the US.

Activision Blizzard, Electronic Arts, Take-Two Interactive Software all fell at least 5 per cent following the remarks, showing investors are worried about a backlash against shooter titles like Call of Duty and Fortnite.

– Additional reporting: Reuters