Markets

Europe ends on a muted note as fresh tariff threats linger; H&M climbs 16.6%

Key Points
  • Sweden's H&M surged to the top of the European benchmark, after posting better-than-expected third quarter earnings.
  • Donald Trump's administration is expected to announce a new round of tariffs on $200 billion worth of Chinese imports as early as this week.
  • British Prime Minister Theresa May said she is willing to pull the U.K. out of the European Union without a deal if it does not agree to her Brexit plan.

European stocks were pointing in different directions by Monday's close, as renewed fears over an escalating trade war between the U.S. and China capped gains in the region.

The pan-European Stoxx 600 finished up 0.12 percent, with the majority of the region's sectors moving higher by the close. On the bourses front, however, markets showed a different picture.

The U.K.'s FTSE 100 closed down 0.03 percent, the French CAC 40 fell 0.07 percent, while the German DAX slipped 0.23 percent. In the periphery, markets were mostly positive.

Europe's retail stocks were among some of the best performers Monday, closing up 0.95 percent amid earnings news.

Sweden's H&M led the gains, surging to the top of the European benchmark after reporting better-than-expected earnings over the third quarter. The world's second-largest retailer said efforts to compete with online sellers and budget brands were now starting to pay off. Its shares climbed, ending the day up 16.63 percent.

Looking at individual stocks, Groupe Casino soared over 7.5 percent after some banks granted its debt-laden parent company, Rallye, an additional 500 million euro ($582 million) credit line, Reuters reported.

At the other end, recruitment consultancy Hays tumbled over 2 percent, after HSBC cut its stock recommendation to "hold" from "buy." The bank said Hays "must do better" to justify a premium valuation.

Meanwhile, Britain's GVC Holdings slipped 3.5 percent, after Barclays cut its target price for the stock.

Trade war

On Wall Street, stocks came under pressure amid heightened worries over a trade dispute between the world's two largest economies. Tech stocks and chipmakers, in particular, came under pressure, as concerns that they might get hit by tariffs weighed on sentiment. This impacted European tech stocks, which dropped 0.78 percent as a sector Monday.

Market focus is largely attuned to global trade developments, as President Donald Trump's administration readies a new round of tariffs on $200 billion worth of Chinese imports, which is expected to be announced as early as this week.

The tariff level is expected to be around 10 percent, according to the Wall Street Journal, far below the 25 percent the White House had said it was considering. The U.S. newspaper also suggested Beijing could cancel proposed trade talks with Washington, if the Trump administration moves ahead with fresh charges.

In data, euro zone annual inflation slowed slightly to 2 percent in August, the EU statistic's office said Monday, confirming an earlier estimate. The reading showed headline inflation had marginally slowed from 2.1 percent in July.

Meanwhile, in Britain, Prime Minister Theresa May told the BBC she is willing to pull the U.K. out of the European Union without a deal if it does not agree to her Brexit plan. Separately on Monday, the EU's chief negotiator, Michel Barnier, said negotiations between the EU and the U.K. were being conducted in a "spirit of good cooperation." Sterling leaped up against the dollar on Monday, hitting a six-week high of $1.3150 during trade.

But the International Monetary Fund on Monday raised concerns over Brexit, warning that any outcome was likely to result in financial adversity for the British economy, and said any "no deal" scenario would be much worse.