EU slashing of growth forecasts causes European stocks to plunge
More than €1.8bn wiped off Irish shares, and FTSE and STOXX have worst day in months
US stocks sank on fears that the United States and China would not be able to reach a trade deal with less than a month left in their fragile truce.Photograph: Brendan McDermid/Reuters
European shares fell sharply on Thursday, ending a seven-session run of gains as a batch of worrying trading updates in a wide range of sectors, and the European Union cutting its growth forecasts weighed on markets.
All but two stocks on the smaller Iseq 20 index saw their shares fall on Thursday as the main Dublin market dropped 2.14 per cent, wiping more than €1.8 billion in market value.
Following a weak day for European banks, Bank of Ireland dropped 4.84 per cent to €5.11 while AIB fell 3.4 per cent to €3.81. German peer Deutsche Bank suffered after two US senators renewed calls for the senate banking committee to investigate allegations of money laundering.
European airlines also suffered on the day and Ryanair was no exception. The budget airline dipped 3.97 per cent to €11.12 while EasyJet and Air France KLM also took a hit.
Datalex was the biggest loser on the all-share index, plunging 14.43 per cent after The Irish Times reported that the Central Bank of Ireland opened an investigation into the company after it issued a profit warning last month. Shares fell to €0.83.
Following the suspension of UK racing as a result of an outbreak of equine flu, Paddy Power Betfair fell 2.34 per cent to €72.45 on its Irish listing.
Finally, Smurfit kappa also had a torrid day, dropping 5.19 per cent to €24.84 on the back of weak data in the paper sector. Its peers also suffered.
The FTSE 100 ended down 1.1 per cent suffering its worst day since December.
London-listed shares of TUI slumped 19 per cent, their biggest ever fall, after the tour operator slashed its profit view for the fiscal year, blaming weakness in the pound and hot weather last summer which it said discouraged people from booking trips abroad.
A fire at Ocado’s flagship robotic distribution centre has wiped out more than a billion pounds off its market value in the last two days as the online grocer expects the incident to hit sales growth. The stock fell 10 per cent on the day.
RBS slipped 4 per cent after a report that the British government would consider trimming is stake in the bank.
Europe’s STOXX 600 ended the day down 1.5 per cent, its biggest retreat since December 27th, while Germany’s DAX sank 2.7 per cent as disappointing data reinforced worries about the euro zone’s economic powerhouse.
Earnings season also brought its share of worries. Publicis dropped 14.8 per cent, its biggest one-day fall since 1992, as investors punished the world’s number-three advertising company for weaker-than-expected revenues.
European automotives also took a hit after Fiat Chrysler (FCA) shares fell 12 per cent as weaker-than-expected guidance for profits and industrial free cash flow raised doubts about the Italian-American carmaker’s longer-term targets.
In the banking sector, Société Générale was down 6.8 per cent after the French bank slashed its profitability targets, hit by the market downturn last year and following its profit warning in January.
The Dow Jones Industrial Average was down 1.33 per cent and the S&P 500 down 1.41 per cent in early trading. Marquee names such as Facebook, Apple, Amazon. com, Netflix and Alphabet fell between 1.2 per cent and 2.2 per cent.
Twitter dropped 10.8 per cent after the company forecast first-quarter revenue below estimates and reported a drop in users for the fourth quarter.
US regional lender BB&T said it would buy rival SunTrust Banks for about $28 billion in stock. SunTrust jumped 6.7 per cent and BB&T rose 1 per cent, leading other regional banks higher. – Additional reporting: Reuters