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European stocks retreat after early gains; tariffs concerns follow Trump victory

Published 2024-11-06, 03:04 a/m
© Reuters

Investing.com - European stock markets fell Wednesday, handing back early gains as investors began to digest the implications of Donald Trump's return to the White House and the likely impact on regional markets. 

At 10:00 ET (15:00 GMT), the DAX index in Germany traded 1.1% lower, the CAC 40 in France fell 0.7% and the FTSE 100 in the U.K. dropped 0.3%.

Trump wins the US presidency

Trump is heading back to the White House as the 47th president of the United States, according to the Associated Press and other major news networks, returning to the White House for a second four-year term.

Republicans are also seen having taken a majority in the Senate, raising the possibility of a Republican sweep in the 2024 elections.

This would provide Trump with a platform to enact his agenda of tax cuts which could boost Corporate America, even if steep tariffs and a potential global trade war under his presidency could impact European companies negatively.

The so-called "Trump trade" is back in full force, according to analysts at Barclays (LON:BARC), characterized by rising rates, a stronger dollar, and higher U.S. stocks, which highlight relief in the market as investors settle into this familiar landscape.

However, European equities may see a relative disadvantage, as a Red Sweep could exacerbate tariff risks for Europe, while a divided Congress could limit domestic fiscal measures while keeping international trade policies at the forefront.

Brussels recognises that threats of 10% tariffs on all U.S. imports and 60% on those from China are credible, not just campaign rhetoric, EU officials say.

BMW's Q3 profit slumps

Back in Europe, data released earlier Wednesday showed that eurozone business activity held steady last month, a small improvement from September's modest decline, supported by an expansion in the bloc's dominant services industry.

The composite Purchasing Managers' Index for the currency union, compiled by S&P Global (NYSE:SPGI), rose to 50.0 in October from September's 49.6.

But most eyes were on more quarterly earnings, with the season in full swing.

BMW (ETR:BMWG) stock fell over 7% after the German auto giant reported a substantial drop in its quarterly third-quarter profit, missing expectations because of slumping China sales and brake problems.

Marks & Spencer (OTC:MAKSY) stock rose 3% after the British retailer reported a better-than-expected 17.2% rise in first-half profit, and forecast "further progress" for the full year, adding to evidence its latest turnaround plan is working.

Puma (OTC:PMMAF) stock fell almost 2% after the German sportswear maker reported a 5% rise in currency-adjusted sales for the third quarter, but this was below expectations as negative effects from foreign exchange rates continued to weigh.

Credit Agricole (OTC:CRARY) stock fell 5% after the French lender reported a drop in third quarter net profit given weakness at some of its retail businesses.

Crude prices slip lower after API release 

Oil prices fell Wednesday after industry data pointed to a rise in US crude stockpiles, while the dollar surged on Trump’s election progress. 

By 10:00 ET, the Brent contract slipped 0.9% to $74.82 per barrel, while U.S. crude futures (WTI) traded 1.2% lower at $71.14 per barrel.

Data from the American Petroleum Institute data, released on Tuesday, showed that U.S. crude inventories rose by 3.13 million barrels last week, higher than the expected 1.1 million barrels.

The official inventory numbers are due later on Wednesday, but if the API release is confirmed it would spur some concerns that U.S. fuel demand was cooling, especially as the winter season approaches. 

A stronger U.S. dollar makes commodities denominated in the greenback, such as oil, more expensive for holders of other currencies, in turn curbing demand.

 

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