Stock markets fell yesterday, hit by the decision by US President Donald Trump to call off a planned summit with North Korea, as well as concerns over a new transatlantic trade conflict as the US mulls tariffs on car imports.
While share prices in Frankfurt and Paris had been higher on bargain-hunting earlier in the day, markets ended the day in the red, pulled down by a weaker showing on Wall Street.
London ended the session 0.9% lower at 7,716.74 points, Paris slipped by 0.3% at 5,548.45 points and Frankfurt shed 0.9% at 12,855.09 points. The EURO STOXX 50 closed 0.6% down at 3,521.76 points yesterday.
In New York, the benchmark Dow Jones Industrial Average dropped 0.8% after Trump informed Kim Jong Un he was cancelling their nuclear summit next month in Singapore, blaming “anger” and “hostility” from the North Korean regime for the spectacular collapse of the historic event.
The region’s bourses had already fallen heavily on Wednesday after Trump said he was not satisfied with talks aimed at averting a trade war with China.
Comments by US Commerce Secretary Wilbur Ross, who said he had initiated an investigation into whether auto imports “are weakening our internal economy and may impair the national security”, added to the sour sentiment.
“Shares took a turn for the worse in the afternoon with global geopolitics in the driving seat,” said London Capital Group analyst Jasper Lawler.
“It was only when US President doubled down on the political uncertainty by cancelling his planned meeting with North Korea leader Kim Jong-un that European indices turned lower,” he said.
Trading was “rather muted... as traders digest the overall impact of a host of geopolitical events, including revival of US-China trade tensions, aggressive North Korea rhetoric and President Trump taking a swipe at auto equipment makers,” agreed Accendo Markets analyst, Artjom Hatsaturjants.
Trump’s war on automakers meant the DAX led the losses across Europe with BMW, Daimler, and VW all down in excess of two%, analysts said.
In London, news that official retail sales unexpectedly rebounded in April, lifted the pound, which in turn weighed on share prices of multinationals listed in London that derive much of their earnings in dollars.
Most major Asian stock markets fell.
Japan’s Nikkei was the biggest loser, shedding more than 1% as the haven yen surged against the dollar.
Visitors walk past an illuminated rotating cube displaying share price information in the atrium of the London Stock Exchange Group’s offices in Paternoster Square. The London bourse ended yesterday’s session 0.9% lower at 7,716.74 points.
