Mega-miner Glencore PLC’s cuts to its production guidance sank European markets Tuesday, dragging down fellow miners in the process.
How did markets perform?
The Stoxx 600 SXXP, -0.18% was down 0.1% to 390.8, giving back Monday’s 0.1% gain.
The U.K.’s FTSE 100 UKX, -0.19% retreated 0.3% to 7,422.2 after posting a 0.2% gain Monday.
The pound GBPUSD, +0.4175% was up 0.3% to $1.2974. It had ticked down 0.1% Monday.
France’s CAC 40 PX1, -0.40% had also gained 0.2% Monday. On Tuesday, it fell back 0.4% to 5,560.
In Germany, the DAX DAX, -0.08% DAX, +0.00% was down 0.1% to 12,315.2 reversing Monday’s 0.1% climb.
Italy’s FTSE MIB I945, +0.11% was flat at 21,789, cementing its 0.2% move upward on Monday.
The euro EURUSD, +0.1877% was 0.1% higher at $1.1199 after ending Monday flat.
What’s moving the markets?
Just when China bulls were starting to feel encouraged, manufacturing Purchasing Manager Index (PMI) survey data produced a significant miss, coming in at 50.2 versus 50.7 expected. The note from Caixin indicated that “relatively subdued demand” left companies reluctant to add to inventories.
Silvia Dall’Angelo, senior economist at Hermes Investment Management, wrote in a note: “The recent slowdown is likely indicative of a much broader structural change in the Chinese economy, as it transitions to a more mature phase.” Dall’Angelo pointed out that China’s economy isn’t just a domestic issue but one that affects nations that trade heavily with the country, particularly Germany: “Over the last two decades, [Germany] has successfully capitalized on China’s rapid growth model by exporting its specialty goods – cars and machinery.”
In other economic data, French preliminary GDP growth figures were in line with expectations at 0.3%. German ILO unemployment figures were slightly better than expected at 3.2%, with 13,000 fewer people unemployed than the prior year. German consumer confidence came in slightly above consensus at 10.4 versus 10.3.
Which stocks are active?
Earnings dominated the news for individual companies. Miners bore the brunt of the declines as Glencore PLC gave its first quarter production report and reduced its full-year guidance for a number of key commodities. Its shares GLEN, -3.38% were down 3%, while fellow miners Rio Tinto PLC RIO, -0.02% BHP Group PLC BHP, +0.11% and Anglo American PLC AAL, -1.54% were down 1.6%, 1.3% and 1.3%, respectively.
Shares of Danish lender Danske Bank A.S. DANSKE, -8.35% dropped 7.2%, as profits fell in the first quarter. The lender also announced lawsuits stemming from the money laundering investigation into its Estonian branch.
Banco Santander S.A. shares SAN, -1.43% were down 0.6% following the Spanish giant’s first quarter earnings which showed that profits fell in its home market as well as in the U.K.
The U.K.’s Standard Chartered PLC STAN, +5.17% turned in pretax underlying profits of $1.38 billion for the first quarter, up 10% year over year. The bank announced a $1 billion share buyback, sending the stock up 5.1%, and CEO Bill Winters said he expected to produce “full year returns of at least 10%” by 2021.
Russ Mould, investment director at AJ Bell, said: “In theory, the company should be able to generate better growth than its UK-listed peers as it benefits from an increasing number of people in developing economies accessing banking services.”
Airplane maker Airbus SE saw a sharp year over year increase in first quarter adjusted profit thanks to more vehicle deliveries, which produced a 24% increase in sales to €12.6 billion. The company is set to become the world’s largest jetliner maker later this year, while the current titleholder and rival Boeing is mired in software problems with its 737 Max line. Shares AIR, -0.49% were down 0.8%.
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