Europe close: Stocks slip as spotlight shifts towards US policy outlook
European stocks slipped as investors weighed the potential implications of the hasty and poorly executed immigration curbs imposed by the new US administration over the previous weekend, with the impact of positive Eurozone data offset by remarks from president Trump's top trade adviser.
By the closing bell, the benchmark Stoxx Europe 600 had lost 0.67%, France’s CAC 40 was down 0.75% and Germany’s DAX edged 1.25% lower.
Meanwhile, oil prices were mixed with West Texas Intermediate up 1.44% to $53.40 and Brent crude gaining 1.15% to $55.87.
Joshua Mahony market analyst at IG said: “European markets are attempting to break from the negative spiral that has been evident so far this week, with the outcry caused by Donald Trump’s travel ban causing widespread selling throughout global markets. Despite the obvious moral impact the travel ban has had, the impact to the majority of businesses is likely to be minimal, providing a great buying opportunity.”
Nonetheless, on Tuesday the spotlight shifted slightly towards FX markets after Trump's trade chief, Peter Navarro, attacked Germany in an interview with the FT for "exploiting" EU members with a "grossly undervalued" euro.
His remarks sent the euro duly higher by 0.76% to 1.0776 in its cross against the greenback.
On the data front, the Eurozone’s gross domestic product rose by 0.5% in the fourth quarter compared to the three months to September and by 1.8% from the same quarter in 2015, according to a 'flash' estimate by Eurostat.
Inflation in the 19 countries that share the single currency jumped to 1.8% in January from 1.1% in December, above analysts’ expectations for 1.5% and marking the highest inflation rate since February 2013. The European Central Bank’s target is to keep inflation just below 2%.
In tandem, the euro area's unemployment rate, on the other hand, unexpectedly fell to 9.6% from a downwardly-revised 9.7% in November and 10.5% for December 2015. That was the lowest rate recorded in the bloc since May 2009 and came in well beneath analysts’ expectations for a reading of 9.8%.
German unemployment, in particular, fell to a record low in January with jobless claims dropping by 26,000 from December far surpassing economists expectations of a 4,000 decline.
On the corporate front, Deutsche Bank was in the red after being slapped with a £163m fine by the UK’s Financial Conduct Authority for failing to maintain adequate anti-money laundering controls. The FCA said that as a result of its inadequate AML control framework, Deutsche was used by unidentified customers to transfer around $10bn, of unknown origin, from Russia to offshore bank accounts in a manner that is “highly suggestive of financial crime”, between January 2012 and December 2015.
Swedish retailer H&M advanced as its pre-tax profit for the fourth quarter beats analysts’ expectations.
Online supermarket Ocado was a high riser as it reported a rise in full-year core earnings and revenue, although there was no news on a long-awaited international deal, while drinks company Britvic also advanced as it reported growth in first-quarter revenue and said it was confident it will meet market expectations for the full year.
Irish convenience food group Greencore gained ground as it posted 17% growth on the year in group revenue for the 13 weeks to 30 December to £417m.
Givaudan was weaker as its net profit for 2016 and its dividend fell short of expectations, while Finnish pulp and paper maker UPM-Kymmene tumbled on the back of a cautious outlook for this year.
UniCredit was on the back foot after the Italian lender said it expected to book a net loss of about €11.8bn for full-year 2016.