European shares slip as Chinese growth slows

Trading subdued as US markets were closed for Martin Luther King Day

European shares slipped on Monday from six-week highs after China’s fourth-quarter growth figures confirmed a slowdown in the world’s second biggest economy, with 2018 its weakest year since 1990.

The pan-European Stoxx 600 fell 0.3 per cent, and Germany's exporter-heavy Dax dropped 0.6 per cent. US markets were closed for Martin Luther King Day.

"Even with the Chinese data dump that greeted the European markets at Monday's open, the session turned out to be a bit of a snooze, lacking an injection of energy from the US," said Connor Campbell, an analyst at Spreadex.


The Irish index traded broadly flat in line with bourses elsewhere. The big mover was Ryanair, which closed 3.5 per cent up at €10.45 on foot of a positive broker's note.


“We think earnings momentum in the European airlines sector will inflect positively as we exit the winter trading season,” the airline’s housebroker Davy said, while give the airline an “outperform” tag and a target price of €14. The airline issued a profit warning last week, its second in four months, on the back of lower projected air fares in the coming months.

The other big Iseq mover was Smurfit Kappa, which ended the day nearly 3 per cent down at €24.46. The packaging giant was laid low by an report suggesting the industry was facing greater competition from high-performance substitutes.

Bookmaker Paddy Power Betfair fell 1.3 per cent to €70.05 after its rival in the UK William Hill said it expects full-year profits to drop 15 per cent on foot of falling offline demand.


The pound struggled for direction on Monday as the prime minister attempted to salvage her Brexit deal in parliament a week after MPs voted it down by a majority of 230. Sterling moved lower against the dollar as Theresa May addressed MPs but then pushed higher. The pound was up 0.2 per cent versus the euro to €1.134 at the London market close.

The FTSE 100 was largely flat on the day, closing just 2.26 points, or 0.03 per cent, higher at 6,970.59.

In corporate news, William Hill expects full-year profits to drop 15 per cent, with the bookmaker blaming conditions on the high street. The bookmaker said adjusted operating profit is set to come in at £234 million, lower than last year but in line with expectations and within the previously-guided range of £225 million to £245 million. Shares in William Hill closed down 2.9p to 172.9p.

GlaxoSmithKline chairman Philip Hampton is to step down from the drugmaker just a month after the firm fired the starting gun on its break-up. The pharmaceutical giant said Mr Hampton, who was appointed non-executive chairman in 2015, has "informed the board of his intention to step down" and the search for his successor has begun. Shares in GSK fell 6.6p to 1,492p.

Just Eat announced that chief executive Peter Plumb is to step down from the online takeaway firm with immediate effect. Chief customer officer Peter Duffy will take on the role of interim boss as the search for a permanent replacement gets under way. Just East shares declined 4.4p to 662.8p.


German chemicals firm Henkel was the biggest Stoxx 600 faller, down about 10 percent, after the maker of Schwarzkopf shampoo and Persil detergent warned earnings would fall this year as it steps up investment in brands and digital technology to try to revive growth. Fourth-quarter earnings at firms such as Henkel are beginning to flow in, but some analysts expect stocks to react positively overall as sharp recent selloffs had sunk valuations.

"I am not too pessimistic," said Christian Stocker, lead equity strategist at UniCredit in Munich. "We saw very negative earnings revisions in Q4, and now the expectations are very, very low."

Shares in online classifieds firm Scout24 climbed 2.1 per cent after it rejected a €4.7 billion takeover offer from private equity firms Hellman & Friedman and Blackstone, potentially paving the way for a bidding war.

Elsewhere, broker notes moved some stocks. Air France shares rose 5.2 per cent after Davy Research upgraded the airline to "outperform", while Fraport gained 3.1 per cent after Goldman Sachs raised it to "neutral" from "sell".

Deutsche Telekom fell 2.4 per cent after Berenberg cut the stock to a "sell", and Pandora slid 1.45 per cent after Citi cut it to "neutral" from "buy".


US markets were closed for Martin Luther King Day.

– Additional reporting by Reuters

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times