Stock Market News – Sea of red for European bourses on strong euro; US indices weaken despite soft dollar

Ioannis Fotiadis, XM Investment Research Desk

All major European bourses declined but a number of blue chips swung into the black thanks to positive updates. The euro’s rally to a two-year high in the past 24-hours has seen the pan-European STOXX 600 turn downwards with the four main country indices falling by more than 1% today.

Investors with positions in large European exporters got cold feet today due to the stronger euro, inducing a sea of red across European equity indices. Germany’s DAX fell by 1.6% by the time the US session started as all sectors plunged, with auto stocks being hit the most. While most euro-reporting companies are still to publish their second quarter results, the prospect of the euro’s strength weighing on future earnings has started to be priced in. Volkswagen (down 4.9%), BMW (down 3.2%) and Daimler (3%) were among the worst hit along with other exporters. Shares of the three auto-makers have been hit by another piece of bad news that got investors worried. German magazine Spiegel reported today that the three carmakers might be under investigation for antitrust collusion.

Vodafone was among the rare gainers today on better-than-expected quarter to June-end, which lifted the stock by 2.3% and boosted the telecom SXKP index to be the best performing one with a 0.5% rise.

M&A activity triggered a surge in Paysafe’s share price, which was up 8.6% after the company received a bid from Blackstone and CVC Capital Partners for a price of nearly $4.7 billion.

Across the Atlantic, equity markets have opened slightly weaker. The Dow Jones Index fell 0.39% while the NASDAQ Composite was down by 0.17% as US trading started. However, the weakness hasn’t dented the indices by much as they still stand at their record highs.

The potential biggest movers of the day among the companies that reported results are GE and a few carmaker companies. GE quarterly revenue dropped 12% on weakness in its energy connection business that offset strength in the renewable and power unit. GE’s share price plunged 5% in the first few minutes of trading.

Due to supply chain connection with Autoliv, share prices of US carmakers such as Ford, General Motors, Fiat Chrysler have been hit. Stockholm-based Autoliv, the world’s largest maker of airbags and seatbelts, expects little gain in its like-for-like sales and softer margins in the third quarter.