Fall in Europe for lack of clear progress on trade and Brexit

PARIS (Reuters) – Europe's major stock markets are down in early trading on Monday, erasing some of their comfortable weekend gains for lack of reassuring news about the US-China trade dispute. on the other hand, Brexit.

In Paris, the CAC 40 lost 0.67% to 5627.74 points around 07:45 GMT. In Frankfurt, the Dax yields 0.5% and in London, the FTSE 100 is down 0.46%.

The pan-European index FTSEurofirst 300 is down 0.61%, EuroStoxx 50 in the euro zone by 0.6% and the Stoxx 600 by 0.75%.

The latter gained 2.31% Friday, bringing to 3% its rise over the whole week while the CAC 40 took 1.73% on the day and 3.23% on the week.

The United States and China announced on Friday night that they have agreed on "Phase 1" of an agreement to end their trade dispute, which led US President Donald Trump to suspend tariff increases. customs which was to enter into force on Tuesday.

The agreement, however, remains to be written in black and white, and it only covers part of the disagreements that led to the conflict between the two countries, which has weighed on world trade for a year and a half.

The latest illustration of the impact of these tensions on the economy: Chinese exports suffered a sharper than expected decline in September and imports contracted for the fifth consecutive month.

"We can say that the white flag brandished by Donald Trump will avoid a new escalation between China and the United States, but none of the customs duties in force was canceled while some market participants hoped," commented Naeem Aslam, from ThinkMarkets.

The latest news of negotiations between London and Brussels on Brexit have also disappointed: the British government has said Sunday that the last exchanges were "constructive" but the two parties still seem far from a compromise likely to be endorsed by the European Council at the end of the week.

Volumes on the European markets could be reduced by the absence of a portion of US investors because of Columbus Day, a holiday in the United States even though Wall Street is operating normally.

VALUES

All the major sectors of the European index move in the red but the most marked declines affect those who benefited the most from the almost general rise on Friday: the European Stoxx index of raw materials lost 2.21%, that of banks 1.42% and that of insurance 1.17%.

In Paris, ArcelorMittal drops 4.67%, the biggest drop in the CAC 40; In addition to the decline in the overall commodities sector, Citigroup's target price has been lowered from 27 to 22 euros.

Bic wins by 4.69% after warning about his 2019 results.

In the news of mergers and acquisitions, the British cyber security specialist Sophos jumped 36.45% in London after the announcement of its acquisition by the private equity group Thoma Bravo on the basis of a valuation of 3, 82 billion dollars (3.46 billion euros).

Faurecia fell 1.95% after the announcement of the purchase of Continental shares (-0.28%) in their SAS joint venture.

IN ASIA

The markets remained closed in Japan, the day being a holiday in the archipelago.

In China, the SSE Composite Shanghai index ended up 1.15% and in Hong Kong, the Hang Seng rose 0.87%, investors welcomed the progress announced talks between Beijing and Washington and the suspension tariff increases expected Tuesday.

A WALL STREET

The New York Stock Exchange ended up Friday but lost ground late in the session with the announcement by Donald Trump a partial agreement with China.

The Dow Jones index, which gained up to 1.6% during the session, reached the close on a rise of 1.21% (319.92 points) to 26,816.59 points. The Standard & Poor's 500, the largest and most important investor base, advanced 1.09% at 2,970.27 points. The Nasdaq Composite, with a strong technology component, gained 1.34% to 8,057.04 points.

RATE

Government bond yields fall after the sharp rise in previous sessions: that of the German ten-year Bund fell more than three basis points to -0.477% after an increase of nearly 15 points over the whole of the last week.

In the US market, the ten-year yield, boosted by the hopes of the US-China agreement, ended on Friday up Friday by more than 10 basis points over the day to 1.757%, bringing to 23 points its rise on the week.

EXCHANGE

The dollar gained nearly 0.2% against a basket of reference currencies, taking over some of the ground sold Friday mainly against the appreciation of the pound sterling.

The latter, which recorded Thursday and Friday its strongest rise over two sessions for several years, is off again after the statements of London and Brussels on the Brexit.

The euro is trading around 1.1020 dollars, down almost 0.2%.

The Chinese yuan is benefiting from the latest announcements on the US-China trade dispute and is up about 0.4% to nearly 7.06 to the dollar.

OIL

The oil market amplifies its decline, also affected by uncertainty over the evolution of the US-China trade dispute.

The Brent drops 1.19% to 59.79 dollars per barrel and the US light crude (West Texas Intermediate, WTI) yields 1.19% to 54.05 dollars.

Both took over 3% over the last week.

(Edited by Jean-Michel Belot)