European Equity Benchmarks Close Lower; Sell Off Hits Broad Range of Stocks

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The broad-based major European indices closed lower in Tuesday trading as mining, financial, health care and industrial stocks helped push the markets into negative territory for the second straight session.

In economic news, the European Council and the European Parliament ended negotiations on the EU budget for 2019 without agreement after the two arms of the budgetary authority concluded that they were not able to reconcile their differences by the end the legal deadline of Nov. 19.

“The Council regrets that it was not possible to reach an agreement on the 2019 EU budget today,” said Hartwig Loger, Minister for Finance of Austria and chief Council negotiator for the 2019 EU budget. “Throughout the conciliation process the Council tried hard to find a solution that would equip the Union for the challenges ahead. But I am still confident that we will be able to agree on next year’s budget before the end of the year.”

The EC now has to present a new draft budget, and said that if the EU budget has not yet been definitively adopted at the beginning of next year, the system of “provisional twelves” applies. This means that not more than one 12th of the budget appropriations for the previous year may be spent each month.

In Germany, the index of producer prices for industrial products rose 3.3% in October compared with the same month last year, according to the Federal Statistical Office (Destatis). Compared with September, the overall index rose 0.3%, and rising 0.5 % in September, and 0.3% in August.

The price indices of all main industrial groups increased in October compared with October 2017. Energy prices were up 9.4%, with petroleum product prices up 19.2%, while prices of natural gas (distribution) rose 9.2%, and prices of electricity increased 9.1%. Prices of intermediate goods were up 2.3%; durable consumer goods rose 1.7%; and capital goods rose 1.4%, while prices of non-durable consumer goods were up 0.2%. The overall index excluding energy was 1.6% from October 2017 and unchanged compared with September.

In France, the average unemployment rate in metropolitan France stood at 9.1% of the labor force, as in the previous quarter, according to the Institute for Statistics and Economic Studies (INSEE). The unemployment rate is now 0.5 points lower than a year ago.

INSEE also reported that the price of North Sea crude oil (Brent) in euros eased in October, rising 4.3% after climbing 7.8% in September, to an average of EUR71 ($81) per barrel. In dollars, the decrease was more marked, rising only 2.7% after increasing 8.8% the previous month, due to the euro depreciating in October.

And in Italy, construction output is increased an estimated 0.5% in Q3 compared to the previous quarter, according to the Italian National Institute of Statistics (Istat). The rise follows growth of 0.7% in Q2, and a contraction of 0.9% in Q1. In September, the seasonally adjusted index increased 1.3% compared with August. Compared with September 2017, production output grew 2.7% after adjustment for calendar effect differences, while the unadjusted index decreased 0.9%.

In equities, mining company Evraz, and airline operator easyJet led the FTSE lower in London, falling 6.1% and 5.5% respectively, followed industrial equipment rental company Ashtead group, and GVC Holdings, which shed 5% and 4.3%. Sales, marketing and support services group DCC and publishing company Informa dropped 4.1% and 3.8%, while Scottish Mortgage Investment Trust, John Wood Group, chemicals company Johnson Matthey, and health care company NMC Health each closed 3.5% lower.

In Frankfurt, adhesives manufacturer Covestro led the DAX sharply lower, tumbling 15.6%, followed by internet company Wirecard, and Deutsche Bank, which fell 5.8% and 4.8% respectively. Chemicals company BASF dropped 4.1%, while kidney dialysis company Fresenius Medical Care, and health care company Fresenius were down 3.2% and 3.1%. Industrial group Thyssenkrupp, and pharmaceutical company Bayer each closed 2.1% lower, while financial services firm Allianz was off 2%.

In Paris, mining company ArcelorMittal, and ophthalmic company EssilorLuxottica led the CAC into negative territory, losing 4.6% and 3.2% respectively, followed by media company Vivendi, and financial protection firm AXA, which lost 2.5% and 2.4%. Bank Credit Agricole, and oilfield services firm TechnipFMC each closed 2.3% lower, while luxury goods company Kering, and IT and consulting firm Cap Gemini were off 2.2% each.

The FTSE lost 0.76%, the DAX dropped 1.58%, and the CAC-40 fell 1.22%.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright (C) 2016 All rights reserved. Unauthorized reproduction is strictly prohibited.

Referenced Symbols: DAX

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