Europe close: Equities plunge as geopolitical tensions rise
European stocks plunged on Tuesday as geopolitical concerns intensified after a Russian warplane was shot down by the Turkish airforce
The benchmark Stoxx Europe 600 index closed down 1.24%, while France’s CAC 40 declined 1.41% and Germany’s DAX lost 1.43%
As of 1634 GMT, the euro was broadly flat against the dollar and declined 0.32% against the yen but gained 0.46% against the pound, while Brent crude rose 2.37% to $45.92 a barrel.
Geopolitical tensions rise
Earlier on Tuesday, a Turkish military jet was reported to have shot down a Russian warplane near the Syrian border, after it had allegedly entered Turkish airspace and ignored warnings to return.
“The heightened geopolitical threat from the downing of a Russian jet by a NATO member country while Brussels remains in lockdown is sending people into safe havens like the yen and gold and out of travel-sensitive stocks,” said Jasper Lawler, market analyst at CMC Markets.
The Stoxx 600 travel & leisure index slumped, dragged lower by the US State Department’s global travel alert on Monday, in which it advised its citizens to exercise vigilance amid “increased terrorist threats”.
IG’s senior market analyst Chris Beauchamp highlighted investors are likely to remain jittery for some time to come, following the latest geopolitical developments.
“Turkey’s downing of a Russian fighter has raised the spectre of further global tensions in an already inflamed trouble spot,” he said.
“While both nations retire to work out their next move investors are left wondering what the ramifications will be.”
On the macroeconomic front, the German IFO institute’s headline business confidence index rose from 108.2 in October to 109 in November, beating expectations for an unchanged reading.
Meanwhile, Germany’s federal statistics office confirmed an earlier flash estimate showing seasonally adjusted GDP grew 0.3% in the quarter to September from the previous three months, when it expanded 0.4%.
Across the Atlantic, consumer confidence declined unexpectedly in November, falling from an upwardly revised 99.1 to 90.4, comfortably below the 99.5 reading analysts had expected
Meanwhile, US economic growth was revised higher in the third quarter as the second GDP estimate was raised to an annualised 2.1% from a previous 1.5%.
In company news, easyJet lost 3.16%, after the low-cost carrier said it was cancelling all flights to and from Sharm el Sheikh until 6 January.
Shares in aerospace supplier Zodiac Aerospace tumbled 7.70% after it reported a 44.6% fall in core annual earnings.
Telecoms group Altice plunged 9.35% after shareholder Next Alt, which is owned by Patrick Drahi, said it wanted to exercise a right to 7.5% of its shares.
Luxury shares were under the cosh following a note from Nomura, which highlighted the risk of a sector de-rating. Burberry, Hugo Boss and Swatch lost 5.01%, 5.35% and 2.63% respectively, while Prada and Richemont lost 1.83% and 3.18% each.