Chinese currency slump raises trade war stakes and spooks investors

European shares slid again on Thursday as China’s retreating yuan exacerbated trade tensions and encouraged investors to sell risky assets.

The UK’s top share index also fell on the renewed concerns over global trade, but a strong performance of defensive stocks and a weaker sterling helped limit its losses.

US stocks struggled for direction as investors assessed the unclear strategy toward Chinese trade. Emerging-market assets had another miserable day, while US treasuries slumped.

DUBLIN

The Iseq fell close to 1 per cent, dragged down by some of its globally-focused stalwarts on trade fears. CRH finished the session down almost 3 per cent at €30.17. It also wasn't helped by a fall last month in US highway contract awards. Smurfit Kappa, meanwhile, fell 0.5 per cent to €34.10.

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Ryanair slid 2.7 per cent to €15.38 after IAG's surprise announcement that it is launching a new budget European airline which will trade under the Level banner. It will begin operations in Vienna.

Housebuilder Cairn Homes rose 1.7 per cent to €1.77 after it announced the €101 million sale of its Hanover Quay development in Dublin.

LONDON

Stocks in so-called “safe-haven” sectors were in demand, with consumer staples and health stocks rising. Many of these big international stocks were also boosted by a fall in sterling as they earn the bulk of their revenues in dollars.

Shares in Diageo and Imperial Brands rose between 0.9 per cent and 2.8 per cent respectively.

Pharma firm Shire was among the biggest FTSE gainers, up 3.1 per cent at a one-month high after a group which was trying to rally support to block Takeda's acquisition of Shire failed to get its proposal passed at Takeda's annual meeting.

Sectors more exposed to the economic cycle, however, such as materials and financials, wiped the most points off the FTSE 100. Among smaller companies, stocks exposed to the UK consumer were once again on the back foot as shares in pub operator Greene King fell 9 per cent following the publication of its full-year earnings.

Greene King reported a drop in pretax profit on the back of softer consumer spending, higher costs and bad weather at the start of the year.

EUROPE

After clawing back some ground on Wednesday, the pan-European Stoxx 600 and Germany’s trade-sensitive Dax were down 0.9 and 1.4 per cent respectively on Thursday, with technology and car-makers taking the biggest hits.

Tech stocks were the worst performers, falling 2.6 per cent as concerns over tariffs spread to a sector thus far considered relatively resilient to trade disruptions.

Chipmakers including the French-Italian STMicro, Germany's Infineon and the Dutch ASML were among the biggest decliners, falling 5.1 per cent, 4.2 per cent and 2.9 per cent respectively.

Asian tech stocks had sold off overnight after threats from US president Donald Trump to curb Chinese investment in US tech firms.

The auto sector index fell 2.4 per cent as a profit warning from German lighting firm Osram renewed anxiety over auto tariffs and their impact. Osram plunged over 20 per cent after it said restrictions on trade and sales affecting auto manufacturers had created "noticeable uncertainty".

NEW YORK

Amazon's foray into drug retailing whipped the healthcare sector. It said it would buy online pharmacy PillPack, a move that will put the online retail giant in direct competition with drugstore chains, drug distributors and pharmacy benefit managers.

Walgreens Boots Alliance, already under pressure after its third-quarter earnings report, tumbled 9.4 per cent and along with UnitedHealth's 1.8 per cent drop pressured the Dow Jones index.

Shares of CVS Health sank 6.6 per cent, Rite Aid fell 10.9 per cent, and Express Scripts was down 1.7 per cent.

Accenture rose 5.2 per cent after the consulting and outsourcing services provider reported quarterly revenue and profit above estimates. Starbucks dropped 4.1 per cent after the company said its chief financial officer Scott Maw would retire at the end of November. – Additional reporting: Reuters/Bloomberg