Europe slumps by the close amid heightened trade tensions; tech sector drops 3%

  • Bourses across the region were seeing red by the closing bell, with the U.K.'s FTSE 100 slipping 1 percent, France's CAC 40 dropping 1.54 percent and Germany's DAX tumbling 1.39 percent. All sectors except banks ended lower.
  • Technology stocks were the worst performers in Europe amid rating downgrades. The sector fell almost 3 percent.
  • Traders are monitoring global trade developments and a Congress grilling of big tech executives.

European stocks finished Wednesday's session deep in the red, as renewed concerns over international trade conflicts hampered investors' appetite for riskier assets.

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The pan-European STOXX 600 extended losses in afternoon trade, tumbling 1.09 percent by the close. All sectors except banks ended in negative territory. A number of Italian banks shot to the top of the pan-European benchmark, with Banco BPM closing up over 7 percent.

Bourses across the region were seeing red by the closing bell, with the U.K.'s FTSE 100 slipping 1 percent, France's CAC 40 dropping 1.54 percent and Germany's DAX tumbling 1.39 percent.

On Wednesday, Europe's technology stocks were the worst performers, sliding 3.04 percent as a whole, amid a flurry of rating downgrades. Credit Suisse slashed its target price for France's Iliad, which sank 6.7 percent; while Jefferies warned the margin performance of Switzerland's Temenos was likely to disappoint investors this year. The Swiss firm tanked 11.3 percent, making it the biggest loser on the STOXX 600.

Looking at individual stocks, Danish hospital equipment maker Ambu fell to the bottom of the European benchmark after investment firm Chr. Augustinus Fabrikker reduced its shareholding in the company to 4.9 percent of share capital. The stock plummeted 11.27 percent.

Meanwhile, German conglomerate Bayer fell on the back of an earnings announcement. The chemicals giant reported a 3.9 percent increase in second-quarter core earnings on Wednesday, as the addition of U.S. seeds maker Monsanto helped to offset weak consumer health care sales and unfavorable currency effects. Shares of the company however slipped 1.7 percent.

NAFTA talks

On Wall Street, stocks posted heavy declines by Europe's market close, with a sharp fall in tech stocks weighing on sentiment. Tech shares came under pressure as Twitter CEO Jack Dorsey and Facebook COO Sheryl Sandberg testified in front of Congress, addressing online election meddling and how to crack down on abuse seen on social platforms.

Consequently, Europe's tech stocks came under additional pressure as the testimony before the Senate Intelligence Committee got underway.

Sticking with the States, discussions between Canada and the U.S. are expected to resume Wednesday. Both countries are looking to find common ground to revamp the North American Free Trade Agreement (NAFTA) after the last round of talks ended without a deal. Canada's foreign minister Chrystia Freeland said Wednesday that officials had been working hard in recent days on the trade talks, adding that she was looking forward to constructive conversations.

Meanwhile, investors continued to monitor the prospect of fresh U.S. charges on China. Last week, reports emerged that the Trump administration may inflict tariffs on another $200 billion worth of Chinese goods as soon as this week.

And the U.K. and Germany have dropped key Brexit demands, Bloomberg reported Wednesday, a move which would ease negotiators on both sides into striking a deal. The British pound shot up following that report, up 0.8 percent against the dollar at $1.296. It has since pared some of its gains.

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