European stocks end strong streak after weak German data

Weak German economic data and a profit warning from Daimler hit European stock markets on Monday as investors reined in any bets on a fourth week of gains before G20 meetings that may see more trade talks between the US and Chinese presidents. Up 4 per cent so far in June, the pan-European Stoxx 600 index closed 0.25 per cent lower on the day, with most of its major component markets in the red, led by a 0.5 per cent dip in Frankfurt's Dax.

US president Donald Trump and his Chinese counterpart Xi Jinping are expected to discuss trade on the sidelines of the summit in Japan, after talks to reach a broad deal broke down last month with the US accusing China of reneging on previous commitments.

DUBLIN

Bank of Ireland and AIB were down 2.9 per cent and 1.2 per cent respectively as financials across Europe weakened on the back of comments from European Central Bank president Mario Draghi, who last week opened the door to rate cuts and the potential reopening of asset purchases. This could potentially weaken the return on tracker mortgage portfolios held by banks here.

Property investment company Green Reit saw its shares rise nearly 2 per cent to €1.78 after it reported a 10 per cent increased in annual rents. In contrast Cairn Homes fell over 4 per cent to €1.15 amid further signs of a slowdown in Dublin's property market. Rival Glenveagh dropped nearly 2 per cent for similar reasons.

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Iseq heavyweight CRH was down 1.5 per cent at €28.08 amid suggestions some investors were keen to realise the gains of recent weeks.

Flutter Entertainment, owner of bookies Paddy Power and Betfair, fell 3.5 per cent to €63.50 as investors weighed up the likely impact of US casino operator Eldorado Resorts decision to buy rival Caesars Entertainment for about $8.5 billion.

LONDON

London’s main index edged up on Monday as gains in defensive stocks such as healthcare were balanced by pressure on Asia-focussed banks, with Sino-US trade talks once again set to take centre stage at this week’s G20 summit.

The FTSE 100 eked out a 0.1 per cent gain, outperforming the broader European index, which fell on poor German economic data, and as a profit warning from Mercedes-Benz owner Daimler triggered a sell-off in the region's carmakers.

HSBC and Standard Chartered were among the biggest drags on the main index, offsetting advances in healthcare firms AstraZeneca and GlaxoSmithKline – considered among safer bets in uncertain times. Admiral Group was among the biggest gainers on the FTSE 100, adding 3.2 per cent, after Barclays upgraded the insurer's rating by two notches.

Shares of retailers and supermarket chains slipped, however, after a forecast showed consumer spending in Britain this year would grow at its slowest rate in six years. Sainsbury shed 4.2 per cent, Kingfisher and Marks & Spencer lost about 2.5 per cent, and Tesco dropped 2.2 per cent.

EUROPE

The main European index has shown signs of flagging in the past week after recouping almost all of its losses from a sharp sell-off in May, helped by expectations of more monetary stimulus globally.

Corporate newsflow continues to point to a slowdown in growth and Mercedes-Benz maker Daimler dropped 3.8 per cent after it cut its 2019 earnings outlook and lifted provisions for issues related to its diesel vehicles by hundreds of millions of euros. Peers Volkswagen and BMW also slipped, taking the European auto sector down 1.2 per cent. That, allied to data showing German business morale fell to its lowest level since November 2014 in June, saw the Dax post its worst session in a week.

NEW YORK

Global equity markets traded mostly flat on Monday as investors awaited US-China trade talks the end of this week at the G20 and the dollar fell to three-month lows on bets the Federal Reserve may cut interest rates more than once this year.

US president Donald Trump targeted Iranian supreme leader Ayatollah Ali Khamenei and other Iranian senior officials with new sanctions on Monday.

On Wall Street, the S&P 500 closed slightly lower as healthcare companies lost ground. The technology-rich Nasdaq also fell while the Dow industrials edged higher.

Stocks are unlikely to push much higher without progress on US-China trade or a Fed rate cut, said Rick Meckler, a partner at Cherry Lane Investments in New Vernon, New Jersey. “Until we get that G20 meeting and start to get some feedback from the [Trump] administration, it’s going to be tough to go higher,” he said.

MSCI’s gauge of equity performance around the globe gained 0.05 per cent.

The Dow rose 8.41 points, or 0.03 per cent, to 26,727.54. The S&P 500 lost 5.11 points, or 0.17 per cent, to 2,945.35, and the Nasdaq dropped 26.01 points, or 0.32 per cent, to 8,005.70. – (Additional reporting: Reuters)