The German’s fears rose due to U.S.-China trade tensions

2 min read

German fears of stock markets' slowdown rose

by Gorica Gligorijevic

German fears of stock markets’ slowdown rose causes the fear, that the whole country may slip into a recession. The day before the US announced its decision to delay part of tariffs on Chinese imports.

The trigger in the German’s markets was news that the country’s economy declined 0.1% in the second quarter of this year in comparison with the prior quarter. According to some analysts, the fears are caused due to global trade conflicts coupled with difficulties in the auto industry. The decline of 0.1% was just a trigger to show them. 

“Data showing that the German economy contracted in the second quarter reignited fears of a global recession, dampening demand for riskier assets such as equities,” said Fiona Cincotta, market analyst at City Index

Many European markets are down.

Germany’s DAX was down 1.5% at 11,575. The CAC 40 in France dropped 1.4% to 5,288. The FTSE 100 index of leading British shares was 1% below at 7,181. 

German fears of stock markets' slowdown rose

The US Wall Street was ready for similar drops at the bell end with Dow futures and the wider S&P 500 futures falling 0.9%.

Tuesday was one of the better days in the markets. The US Office of the U.S. Trade Representative announced that the US will delay the tariffs on some of China’s products like consumers goods. But some sorts of fish or baby seats are entirely removed. The new trade policy will be on scene until December 15.

European shares stabilized on Thursday 

But prior there was a brutal sell-off. It was fired by overall fears of a recession. The investors were expecting central banks would relax monetary policy and calm nervous markets.

The pan-European STOXX 600 index dropped at 0828 GMT hitting the point very close to six-month lows.

The trading volumes in Italy, Austria and Greece were closed for a holiday. Almost all European markets moved to the negative area.

London’s FTSE 100. underperformed its European rivals, burdened down by oil main and some stocks that traded out of dividend right.

In profits news, strong numbers from beer maker Carlsberg In Denmark (CARLb.CO) and shipping group A.P. Moller-Maersk (MAERSKb.CO) pushed stocks of these Danish companies to more high-priced.

Drillisch and United Internet slipped below after the German telecom company lessened its profit outlook.

Here is a short summary of EU markets:

UK FTSE 100 -1.7% hits two month low
German DAX -2.3% hits a four-month low
French CAC -2.2% hits one week low
Italy MIB -2.8% hits two month low
Spain IBEX -2.2% hits two month low

The German DAX again broke the 200-day moving average, the last low was in June. It stopped at the 50% retracement of the rally in December. DAX primarily have to survive on that level. If don’t, the market may be very violent. But if Angela Merkel announces a 180 on deficit spending, the investors on the German stock market will have hope.

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