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European shares drop on global worries; Italy, Spain underperform

Stock MarketsAug 13, 2019 06:00AM ET
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© Reuters. European shares drop on global worries; Italy, Spain underperform

By Agamoni Ghosh and Shreyashi Sanyal

(Reuters) - European shares fell on Tuesday, as negative news from around the globe including Italy and Argentina's political uncertainty and persistent unrest in Hong Kong, compelled investors to take refuge in safe harbors like bonds and gold.

The pan-European STOXX 600 index (STOXX) fell 0.4% by 0810 GMT, with European lenders (SX7P) weighing the most on the benchmark.

Markets world-wide, already reeling from fears that the United States and China may not end their bitter trade-war anytime soon, were further distressed as Argentina's currency crashed, unrest in Hong Kong intensified and Italy's political worries deepened.

"It's a number of different things that's weighing on sentiment today, it's a mix of everything," said David Madden, analyst at CMC Markets in London.

"There are just negative stories from every corner of the globe you look at, not independently, but when you piece them together it becomes overtly negative."

Milan-listed shares (FTMIB) were down 0.7%, hitting their lowest since June as right-wing League leader Matteo Salvini's drive for early elections hit a road bump with parliamentary leaders failing to decide when the Senate should debate his no-confidence motion.

Italian markets had tumbled last week when Salvini pulled his support from the coalition arrangement at the center.

Spanish stocks (IBEX), particularly banks which have exposure to Latin America, underperformed as investors dumped Argentine assets on worries over the return of populist policies after President Mauricio Macri was trounced in presidential primaries.

Argentina's peso collapsed on Macri's defeat, losing roughly 15% of its value to 52.15 per dollar after crumbling to an all-time low of 61.99 earlier on Monday.

Corporate news was light as the second-quarter earnings season draws to a close.

Henkel (DE:HNKG_p) shares slid 5% after the German consumer goods company lowered its full-year outlook for sales and earnings, but German meal-kit delivery firm HelloFresh (DE:HFGG) jumped 7% on breaking-even for the first time since its trading debut.

The withdrawal of British food delivery service Deliveroo from the German market sent shares of competitor Delivery Hero (DE:DHER) higher, while Takeaway.com (AS:TKWY) which owns Delivery Hero's German arm rose 3%.

Shares of tour operator TUI (DE:TUIGn) rose over 3% after it said robust business outweighed problems with the grounding of Boeing's (N:BA) 737 MAX jets in the third quarter and upheld its annual earnings outlook.

Defensive plays such as real estate (SX86P) and telecom (SXKP) were among the few sectors in the black.

European shares drop on global worries; Italy, Spain underperform
 

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