Europe midday: Equities descend further into red on geopolitical woes
European equities descended further into the red on Thursday amid growing fears about instability in the Middle East in the wake of Saudi Arabia's air strikes on neighbouring Yemen.
Airbus Group N.V.
€158.52
16:29 25/04/24
CAC 40
8,016.65
17:00 25/04/24
Dassault Systemes
€37.29
16:29 25/04/24
Deutsche Lufthansa AG
€6.65
17:19 25/04/24
DJ EURO STOXX 50
4,939.01
23:59 25/04/24
FTSE 100
8,078.86
17:14 25/04/24
Havas
€9.25
16:30 01/09/22
IBEX 35
10,983.70
18:45 25/04/24
Telefonica
€4.15
18:16 25/04/24
Xetra DAX
17,917.28
18:59 25/04/24
Overnight, Saudi Arabia launched air strikes in Yemen in an effort to defeat rebel Houthi fighters from the north of the country. The Houthi are attempting to topple the Yemeni government to gain control over the country, which is viewed as a threat to security by Saudi Arabia.
Predictably, oil prices spiked as a widening conflict in that Gulf country could pose risks for global oil supplies. Midday in Europe, crude prices eased off session highs but remained elevated on worries about the Middle East.
Nymex crude futures were up 3.9% to $5.79 per barrel while the price of Brent crude oil, the international benchmark, was higher by 3.4% to $58.46 a barrel.
Geopolitical tensions forced market participants to dump risk assets in favour of traditional safe-havens like gold, which shot up 0.9% to trade at $1208 per troy ounce.
By contrast, the UK's FTSE 100 lost 1.4% while the DAX in Germany shed 1.8%. France's CAC-40 was off 1.7% while Spain's IBEX-35 dropped 1.2% to 11362. The broader Stoxx Europe 600 index shed 1.7% to trade at 392.2.
European equities were further pressured by the sour tone from Wall Street's heavy losses on Wednesday, when the S&P 500 tumbled 1.5% and the technology heavy Nasdaq Composite lost 2.4% to register its biggest daily drop in nearly a year, pushing the CBOE's Vix index, a volatility measure, to jump 13% higher.
Worries about the outlook for tech firms given the backdrop of a stronger US dollar and weak product sales rattled confidence for tech firms.
In Asia, the losses on the Nasdaq 100 translated into a 1.4% slump on the tech-rich Japanese Nikkei-225, while in Europe the Stoxx 600 technology index lost 2.6%.
Closer to home, sentiment was also under pressure on news that Greece had failed in a bid on Wednesday to secure a quick cash payment from the Eurozone bank bailout fund to help stave off potential bankruptcy next month.
However on Thursday, Greece's Economy Minister George Stathakis reportedly said on that the government could reach an agreement with European Union finance ministers by 'next week.'
Economic news out of the Eurozone was generally upbeat on Thursday. Eurozone M3 data, which measures the annual growth rate of the broad monetary aggregate increased to 4.0% in February 2015 from 3.7% in January.
The three-month average of the annual growth rates of M3 in the period from December 2014 to February 2015 increased to 3.8%, from 3.5% in the period from November 2014 to January 2015.
Elsewhere, data showed the Spanish economy grew by 0.8% in the first quarter of 2015, according to an estimate by the Bank of Spain. Before that, France said its deficit narrowed faster than anticipated to 4% of gross domestic product in 2014, from 4.3% in the previous year.
In the FX market, the euro responded favourably to the better sounds out of Eurozone data and extended Wednesday's gains to push up above the $1.1 mark against the US dollar after sagging to a 12-year low earlier this month.
At 1230 GMT, the euro rose 0.5% to change hands with the US dollar at $1.1059. The British pound was up 0.4% against the US dollar at $1.4934 after better than expected UK retail sales data.
In company news, advertiser Havas slumped 5.3% after French billionaire Vincent Bolloré launched an accelerated placement to sell about 17% of his majority stake in French advertising group.
Airliner Lufthansa's shares tumbled 4.2% as investors remained concern about the future of the airline's Germanwings business and its reputation following a crash in the French Alps which killed everyone on-board. Latest developments suggest one of the co-pilots locked the other one out of the cockpit before starting the jet’s descent lower.
In the aerospace and defence sector, Airbus shares lost 1% after it raised €1.64bn from the sale of a 17.5% stake in Dassault Aviation.
Meanwhile, in the telecoms sector, Telefonica shares fell 1.3% after it announced on raising €3bn in a rights issue to help fund the purchase of Vivendi's Brazilian unit GVT.
Looking ahead, attention turns to European Central Bank president Mario Draghi’s speech to the Italian parliament’s finance and EU policy committees in Rome and Bank of England Governor Mark Carney’s a press conference about his role as Chair of the Financial Stability Board in Frankfurt.