European Stocks Tumble on North Korea's Missile Test Announcement

Published July 4th, 2017 - 12:00 GMT
Share prices scroll across a screen hanging in a Paris stock exchange. (Eric Piermont/ AFP)
Share prices scroll across a screen hanging in a Paris stock exchange. (Eric Piermont/ AFP)

European equities moved lower on Tuesday as investors mulled North Korea’s claim that it had become a “nuclear state”, while market players would trade without the influence of Wall Street as the New York Stock Exchange remains closed for the Independence Day holiday.

Nearing midday trade in Europe, the benchmark Euro Stoxx 50 lost 0.39%, France’s CAC 40 fell 0.45% while Germany’s DAX 30 traded down 0.36%.

North Korea said on Tuesday it successfully test-launched an intercontinental ballistic missile (ICBM), which flew a trajectory that an expert said could allow a weapon to hit the U.S. state of Alaska.

The country run by leader Kim Jong Un who ordered the launch released a statement saying that it is “now a proud nuclear state” that can “target anywhere in the world.”

The statement added that “we can fundamentally end the U.S.” empty threat of nuclear war and offer reliable protection of the peace and stability in the region.”

In a relatively light day for macro data, the number of unemployed in Spain fell less than expected, while construction activity in the U.K. slowed slightly more than forecast.

In the euro zone, the producer price index declined more than expected in May.

On the business front, M&A supported investor enthusiasm.

Worldpay Group (LON:WPG) jumped 19% to the top of the Stoxx 600 as the British payment processor said that had received preliminary approaches from Vantiv Inc and JPMorgan Chase (NYSE:JPM) in relation to the potential acquisition.

Shares in STADA (DE:STAGn) also jumped 2.5% on reports that the German generic drug maker may receive an improved takeover offer from Bain Capital and Cinven after an earlier offer of €5.3 billion ($6 billion) fell through in June.

On the downside, EDF (PA:EDF) led decliners on the Stoxx 600, falling 4%, as the French energy firm admitted that its Hinkley Point project in the U.K. was £1.5 billion ($1.9 billion) over budget and a year behind schedule.

Meanwhile, oil prices were lower on Tuesday as market players took profit after eight straight days of gains, its longest winning streak since February 2012.

European energy stocks traded mixed, as French oil and gas major Total SA (PA:TOTF) lost 0.29%, Italy’s ENI (MI:ENI) was unchanged but Norwegian rival Statoil (OL:STL) traded up 0.36%.

Financial stocks were also mixed, as French lenders BNP Paribas (PA:BNPP) dropped 0.18 but Societe Generale (PA:SOGN) rose 0.53% while Germany’s Deutsche Bank (DE:DBKGn) gained 0.40% and Commerzbank (DE:CBKG) traded down 0.14%.

Among peripheral lenders, Italian banks Intesa Sanpaolo (MI:ISP) and rival Unicredit (MI:CRDI) rose 0.14% and 1.12%, respectively, while Spanish banks BBVA (MC:BBVA) and Banco Santander (MC:SAN) fell 0.24% and 0.55%, respectively.

In London, the commodity-heavy FTSE 100 lost 0.17%.

Shares in Glencore (LON:GLEN) fell 0.63%, Anglo American (LON:AAL) lost 0.80%, BHP Billiton (LON:BLT) slipped 0.12% and Rio Tinto (LON:RIO) traded down 0.90%.

Energy stocks showed mixed signs, as BP (LON:BP) gave up 0.44% but rival Royal Dutch Shell (LON:RDSa) advanced 0.22%.

Financial stocks saw mixed trade, with shares in HSBC Holdings (LON:HSBA) down 0.69% and Royal Bank of Scotland (LON:RBS) up 0.39%, while Lloyds Banking (LON:LLOY) gained 0.60% but Barclays (LON:BARC) slipped 0.05%.

In the U.S., stock futures tracked higher though Wall Street won’t reopen its doors until Wednesday. The Dow Jones Industrial Average futures edged forward 0.06%, S&P 500 futures gained 0.18%, while the Nasdaq 100 futures rose 0.20%.

 

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