Not a glamorous day for shares in luxury goods companies
London (AFP) - European stock markets fell Wednesday, under pressure from high US bond yields amid fears of a coming economic slowdown that hurt stocks in luxury goods firms particularly hard.
Analysts said investors looking for reasons to dump shares had a good many to choose from.
“There are a number of worries for investors right now, from the pace of rising bond yields and the impact on investor sentiment, to Italy’s populist coalition playing a game of chicken with the European Commission, stalling Brexit negotiations and the ongoing trade conflict between the US and China,” said Craig Erlam, senior market analyst at Oanda trading group.
A strong euro against the dollar added pressure on eurozone stock markets.
- Luxury unglamorous -
Shares in European luxury companies lost much of their shine as investors feared that any slowdown in global economic growth will translate into dwindling sales for high-end firms.
The IMF on Tuesday delivered a reality check on world growth, cutting its forecast for global expansion because of trade risks and rising international debt levels.
In Paris, shares in Kering, LVMH and Hermes were all around five percent lower, while in Milan, Moncler lost more than six percent, Ferragamo more than four, and Luxottica over three percent.
In Zurich, Richemont and stocks in several leading watch manufacturers also suffered sharp falls.
Investors fear that luxury sector players “won’t be able to sustain the pace of growth seen in previous quarters if the economic slowdown in emerging countries gets much worse, particularly in China,” Yann Azuelos, a portfolio manager at Mirabaud France, told AFP.
Wall Street was slightly softer shortly after the opening bell.
- Italian worries -
Asian stock markets ended cautiously higher Wednesday, after a volatile session for US equities and as yields on Treasury bonds retreated from a seven-year peak.
Investors have been nervous since the yield on 10-year US Treasury bonds surged above 3.0 percent.
The advance followed a stream of strong US economic data that was seen as boosting the likelihood that the Federal Reserve will persist in raising interest rates.
In Europe this week, the closely-watched spread between the rates on 10-year bonds in Italy compared with those offered by Germany, which is a measure of the added risk perceived by investors to holding onto Italian debt, hit the highest level since April 2013.
Markets have been shaken by a row between Brussels and Rome, who are at loggerheads after Italy’s populist government passed a purse-busting budget last week to the annoyance of the EU.
- Key figures around 1335 GMT -
London - FTSE 100: DOWN 0.3 percent at 7,216.76 points
Paris - CAC 40: DOWN 1.2 percent at 5,254.65
Frankfurt - DAX 30: DOWN 1.1 percent at 11,852.10
EURO STOXX 50: DOWN 0.7 percent at 3,297.96
New York - Dow Jones: DOWN 0.1 percent at 26,396.35
Hong Kong - Hang Seng: UP 0.1 percent at 26,193.07 (close)
Shanghai - Composite: UP 0.2 percent at 2,725.84 (close)
Tokyo - Nikkei 225: UP 0.2 percent at 23,506.04 (close)
Euro/dollar: UP at $1.1519 from $1.1494 at 2100 GMT on Tuesday
Pound/dollar: UP at $1.3182 from $1.3144
Dollar/yen: UP at 113.19 from 112.95 yen
Oil - Brent Crude: DOWN 45 cents at $84.55 per barrel
Oil - West Texas Intermediate: DOWN 41 cents at $74.55