German shares drag Europe lower as BASF profit warning bites

Ryanair falls 5 per cent as French government threatens eco tax on airlines

Ryanair closed down over 5 per cent lower in Dublin

Ryanair closed down over 5 per cent lower in Dublin

 

German shares drove Europe lower on Tuesday after a profit warning from chemicals giant BASF citing trade friction put chemical and auto makers on the back foot, while a slump in copper prices knocked mining stocks.

DUBLIN

The Iseq index closed down 0.8 per cent led by Ryanair, which lost over 5 per cent as airlines across Europe suffered on the back of news that the French government plans to introduce an eco tax on airlines flying out of the country. A downgrade on rival EasyJet also weighed on sentiment in the sector.

Paddy Power owner Flutter was down almost 0.7 per cent but held on to most of the gains it made last week as rival GVC stayed in the spotlight over the offloading of its Turkish business.

CRH outperformed its peers to close 0.5 per cent lower with Kingspan down 1 per cent.

Origin Enterprises, which on Tuesday announced the sale of 31 acres of land in the Cork docklands for €47.5 million was unchanged.

LONDON

Britain’s mid-cap index fell for the third straight session on Tuesday amid a deteriorating economic outlook and Brexit tensions, while online grocer Ocado jumped on the FTSE 100 after it confirmed its annual forecast.

The main index fell 0.2 per cent and the mid-cap FTSE 250 shed 0.6 per cent, as a hefty profit warning from German chemicals giant BASF rocked several industrial companies.

Shares of airlines and tourism companies took a hit from the increasing uncertainty. TUI and easyJet fell about 3 per cent, British Airways owner IAG lost 1.6 per cent, while Thomas Cook gave up 5.1 per cent.

The FTSE 100 took a back seat to the domestic index, but was led lower by losses in miners, as copper prices continued their recent slide on worries over waning demand from top consumer China.

However, Ocado surged 5.6 per cent on its best day since late February after it affirmed its annual forecast, even though its first-half core earnings nearly halved, partly due to the impact of a fire at its flagship robotic warehouse.

Irish-owned Grafton, which is due to issue a trading update on Wednesday, closed down 0.25 per cent having had a few tough days.

EUROPE

BASF lost over 3 per cent after warning that profit would fall below forecasts for the second quarter and the full year with the slowdown in global growth weighing on the agricultural as well as auto sectors. The warning triggered several ratings downgrades from brokerages and knocked shares in peers such as Bayer, Covestro, Evonik and Wacker Chemie while pushing both Europe’s chemicals and auto indexes over 1 per cent lower.

Banks continued to suffer with Deutsche Bank extending its losses. It posted its worst day in five months in the prior session as investors questioned the bank’s restructuring targets and its ability to make profits after it undertook a major overhaul.

Nordic lender Danske Bank, which has been struggling to restore trust among investors after disclosing a major money-laundering scandal, also weighed on the sector after the banks cut its 2019 earnings forecast for the second time.

WALL STREET

The S&P 500 and the Dow Industrials were on track to fall for the third straight session on Tuesday, as investors worried over warnings of a hit to earnings from the US-China trade dispute and reined in hopes of a steep interest rate cut this month.

Adding to the downbeat mood, RBC Capital Markets downgraded 3M Co to “sector perform”, citing macro pressures from China, auto and electronics sectors. The industrial conglomerate’s shares fell 2.4 per cent. Boeing slipped 0.4 per cent after reporting a 37 per cent drop in deliveries in the first half of 2019, hurt by the grounding of its best-selling 737 MAX jets.

Additional reporting: Reuters