North Korea tensions, strong euro send European shares to six-month low
Reuters
Published Aug 29, 2017 10:12
North Korea tensions, strong euro send European shares to six-month low
By Helen Reid and Danilo Masoni
LONDON (Reuters) - Rising geopolitical tensions and a surging euro sent European shares to their lowest in six months on Tuesday after a missile launch by North Korea sapped Asian markets.
The pan-European STOXX 600 (STOXX) fell 1.5 percent, set for its worst daily performance in nearly 14 months and firmly on track to make August its third month of losses in a row.
Political risks and a strengthening currency denting exporters have put pressure on European benchmarks.
On Tuesday the euro
The euro effect combined with a broader risk-aversion mood to send euro zone stocks and blue-chips down 1.3 percent. Britain's FTSE (FTSE) fell 1.4 percent and the exporter-heavy DAX (GDAXI) hit a five-month low.
North Korea fired a missile over northern Japan, weakening Asian stocks and the U.S. dollar overnight.
As geopolitical concerns spread to European markets, all sectors fell and among the only bright spots were gold miners Randgold Resources (L:RRS) and Fresnillo (L:FRES), up 3.1 to 3.8 percent as the price of gold soared to a 9 1/2 month high with investors rushing into safe haven assets.
Banking stocks (SX7P) sank 1.3 percent to a two-month low.
The VSTOXX (V2TX), a gauge of European investor anxiety, jumped to its highest in a week.
German commercial broadcaster Prosiebensat (DE:PSMGn) fell as much as 13 percent to a near three-year low after flagging a weaker outlook for advertising in the third quarter, the third cut in advertising guidance this year according to Deutsche Bank (DE:DBKGn) analysts.
"The most direct negative read-through is for German peer RTL," said analysts at the German bank.
"But this also represents another major piece of evidence of the disconnect between solid European macro trends and weakening TV ad momentum," they added.
German peer RTL Group (DE:RRTL) dropped 8 percent, while Spanish and British broadcasters Mediaset Espana (MC:TL5) and ITV (L:ITV) both also fell 3.5 to 5 percent.
The losses heaped pressure on the media sector (SXMP), the second worst-performing in Europe this year, down 2.5 percent on the day.
Get The App
Lundin Petroleum (ST:LUPE) sank 7 percent after its Korpfjell prospect, a joint venture with Statoil (OL:STL) in the Arctic Barents Sea, found no oil and only non-commercial quantities of natural gas.
Shares in French investment firm Wendel (PA:MWDP) jumped 3.5 percent after an upgrade to "buy" from Societe Generale (PA:SOGN), whose analysts praised the firm for increasing its loan-to-value ratio and the share of unlisted assets in its portfolio.
With the Jackson Hole symposium yielding no big change to monetary policy expectations, and an earnings season meeting lukewarm share reactions, catalysts to support European equities were scarce. Some investors expected a correction, though valuations in the region remained attractive relative to Wall Street.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.