Carmakers drag European bourses into the red

European shares fell on Monday as carmakers took a hit from a Chinese sales forecast. London’s main stock index gained, however, as investors took heart from the imminent signing of a US-China trade deal. Meanwhile, hopes of further interest rate cuts by the Bank of England helped midcaps outperform.

US stock indices hit fresh record highs on the China trade deal hopes.

DUBLIN

The Iseq slipped by almost 0.5 per cent, tracking the performance of many of its European peers.

The best performer was embattled oil explorer Providence Resources, which rose by more than 48 per cent to about 7 cents per share on news of an incentive package for its new chief executive Alan Linn.

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Irish stocks that are sensitive to global trade performed well. Building materials group CRH rose more than 1 per cent to €35.40. Paper and packaging company Smurfit Kappa rose 1.3 per cent to €33.50, while food group Glanbia rose 0.6 per cent to €10.35.

Irish banks stalled, however, with AIB down 1.4 per cent to €3.06, and Bank of Ireland falling 1.4 per cent to €4.72.

LONDON

The FTSE 100 added 0.4 per cent, having earlier touched its highest level so far this year, as trade hopes were complemented by easing Middle East tensions. The FTSE 250 outshone the blue-chips and the European benchmark with a 0.7 per cent rise on its best day since January 2nd.

The midcaps were also boosted by a 7.1 per cent jump in Pennon after a report that the company had rejected private equity firm KKR's bid for the UK utility's waste management unit. Its shares hit an all-time high and helped those of blue-chip peers United Utilities, Severn Trent and Centrica gain more than 2 per cent each.

Housebuilders climbed higher, led by a 2.2 per cent rise in Taylor Wimpey, after upbeat forecast and bullish comments from real estate services provider Savills. Savills' shares leapt 7.2 per cent to scale a record high.

A brighter trade view, along with a rating upgrade from BofA Global Research, helped BAE Systems climb 3.6 per cent to the top of the main index.

Retailers were among steepest small-cap fallers. Fashion brand Ted Baker lost 6 per cent after RBC downgraded the stock. Fellow retailer Superdry, which issued a profit warning last week, shed 6.5 per cent despite RBC raising its rating.

EUROPE

The benchmark European STOXX 600 index slipped 0.2 per cent to extend losses to a second session despite a rally in global markets.

Auto stocks broke a four-day winning run to fall 0.9 per cent. Renault led the fall, hitting a six-year low as investors worried that the French company's 20-year cost-sharing alliance with Nissan could collapse without Carlos Ghosn to hold it together.

The China Association of Automobile Manufacturers (CAAM) earlier reiterated that auto sales are likely to shrink for a third consecutive year in 2020, damaging the outlook for European carmakers in one of their most important markets.

Germany’s DAX index, heavy with auto and parts exporters, registered a 0.2 per cent decline as it retreated slightly from the close to two-year high hit in the previous session. A slide in bank stocks ensured Italy and Spain led losses among regional peers.

NEW YORK

Google-owner Alphabet Inc rose 0.6 per cent and was set to cross $1 trillion in market capitalisation to join Apple and Microsoft.

Aerospace companies Hexcel Corp and Woodward Inc rose 7.8 per cent and 3.3 per cent respectively after the two Boeing suppliers said they would combine in an all-stock merger valued at $6.43 billion.

Tesla jumped 8.1 per cent after a report that China would not make significant cuts to subsidies for new energy vehicles this year, while Oppenheimer boosted its price target on the stock.

Investors are awaiting earnings from big banks JPMorgan Chase, Citigroup and Wells Fargo, which kick off the fourth-quarter reporting season from Tuesday. – Additional reporting: Reuters)