Asos profit warning sends European stocks lower

European shares tumbled on Monday when a profit warning from online fashion retailer Asos sent retail stocks into nose-dive as investors fretted that consumers were failing to deliver the traditional pre-Christmas spending boost to markets.

Dublin

Irish stocks lost 0.67 per cent of their value on the day with financials and property names among the worst affected.

Bank of Ireland dipped below the €5 mark as shares fell 3 per cent, while rival AIB dipped 1.07 per cent.

Despite little news flow relating to Irish stocks, there was decent volume in the market, which helped push house builders lower.

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Glenveagh Properties, with seven million shares traded, dropped 3.3 per cent to €0.73, while Cairn Homes fell 2.7 per cent to €1.08 on much lower volume. Peers in the UK witnessed similar falls of 2-3 per cent.

For those stocks that did trade in the green on Monday, there was little volume changing hands. Irish Continental Group rose 2.57 per cent to €4.79, while Kerry Group advanced 1.9 per cent to €91.50.

Airlines, too, were troubled on the day with Ryanair falling 3.26 per cent to €10.52 – again more or less in line with UK and European peers.

London

UK shares fell sharply on Monday, as the profit warning from Asos reverberated across Europe.

Asos plunged more than 37 per cent, recording its worst one-day drop ever and losing roughly £1.3 billion (€1.45 billion) in market value. Among big fallers on the main index were high-street retailers Next and Marks & Spencer, which fell 4.6 per cent each, and Kingfisher, which was down 4.2 per cent.

Asos rival Boohoo fell as much as 18 per cent at the open, before recouping some losses after it reported record Black Friday sales, ending the day with a 13.7 per cent fall.

Also weighing on investor confidence was property data showing that asking prices suffered their biggest fall over a two-month period since 2012. That pulled down the shares of house builders Persimmon, Barratt Developments, Taylor Wimpey and Berkeley, which dropped 1.4-4.1 per cent.

Europe

Euro-zone stocks were down 1 per cent while Germany’s Dax fell 0.8 per cent and Britain’s Ftse 100 lost 0.9 per cent.

Shares in Zalando, a German rival of Asos and Europe's biggest online retailer, dropped 11.6 per cent. Swedish retailer H&M fell 8.5 per cent despite reporting in-line sales figures, as the Asos stress spread.

Outside retail, M&A drove some big moves with Ingenico tumbling 7.4 per cent after it said it had dropped talks over a possible deal. Sopra Steria and Worldline fell 11.4 per cent and 6.8 per cent respectively after Morgan Stanley lowered its rating on the stocks. Swedish electrical components maker Dometic fell 5.3 per cent after Kepler Cheuvreux cut its rating on the stock to a "hold" from a "buy".

New York

Wall Street dropped on Monday but recovered from a slide of over 1 per cent, weighed down by an Amazon-led drop in retailers and weakness in health stocks, with gains in banks ahead of a widely expected rate hike limiting losses.

S&P 500 retail stocks tumbled 1.5 per cent after Asos's profit warning led to concerns over consumer spending. Amazon. com declined 2.1 per cent and was the biggest drag on the S&P 500 and Nasdaq.

While financials gained, Goldman Sachs dropped 1.8 per cent to a two-year low after Malaysia filed criminal charges against the bank and two former employees in connection with the 1MDB investigation. The stock is now the worst performer among the 30 Dow Industrials.

Johnson & Johnson continued its slide with a 2.5 per cent drop after a Reuters report that the pharma major knew for decades that its Baby Powder contained asbestos.

– Additional reporting: Reuters