European and US stocks were mostly lower yesterday, relinquishing early gains, as global tensions over trade took their toll on investor confidence. Political worries sparked by the latest shakeup in US President Donald Trump’s administration also prompted selling.
On the economic front, a disappointing US retail sales report for February prompted worries about the health of consumer spending, a big engine for American growth, analysts said.
News that Trump had replaced his moderate secretary of state Rex Tillerson with a foreign policy hawk fanned fears of instability in the White House and a more hardline approach to foreign affairs sent US stocks lower on Tuesday and Asian shares followed early on Wednesday.
An attempt on both sides of the Atlantic to claw back ground earlier Wednesday faltered during the European afternoon amid what Charles Schwab analysts called “festering global trade uncertainty”. Tillerson was replaced by CIA chief Mike Pompeo, who is an advocate of taking a hard line with China on trade and Iran.
“Musical chairs in Washington fuelled fresh concerns of instability within the Trump administration yesterday, adding to fresh worries about Russia on several fronts,” said Mike van Dulken, head of research at Accendo Markets.
“Investors, however, are demonstrating new-found thickness of skin following several years of geopolitical surprises...” he said.
He pointed to positive economic data coming out of China helping fuel gains for shares of heavyweight mining firms listed in London.
Prudential was a star on the British index, up nearly 6% after the insurer said it would split in two to better serve its regions of operation.
“The London market is being helped along by mining companies, on the back of respectable industrial production figures from China,” said David Madden, market analyst at CMC Markets UK.
“Shares in Prudential are up...after the company revealed plans to demerge,” he added.
In Frankfurt, Adidas shot up well over 10% after the German sportswear giant reported higher profits in 2017 on worldwide sales growth and cost savings.
Spanish retail giant Inditex meanwhile climbed more than 4% after the group posted rising annual profits — outperforming its long-time Swedish rival H&M.
In foreign exchange, the dollar was down versus the euro, the yen and the pound.
“The dollar sell-off can be attributed to the combination of lower (US inflation) and the White House revolving door syndrome that exudes little confidence in the administration,” said Stephen Innes, head of Asia-Pacific trading at Oanda.
Official data Tuesday showed US inflation eased in February, helping to wind back concerns that the Federal Reserve would hike interest rates faster than expected this year.
In London, the FTSE 100 closed down 0.1% at 7,132.69 points; Frankfurt — DAX 30 ended up 0.1% at 12,237.74 points and Paris — CAC 40 closed down 0.2% at 5,233.36 points yesterday.