Well, European equities closed the week on a decidedly sour note, as Friday saw tobacco shares plunge and Stoxx 600 automakers decline sharply, with the latter posting their largest back-to-back weekly decline in 15 months.
Weighing on sentiment Friday was Renault, which fell hard on 1H results that Morgan Stanley called “disappointing.” Renault’s auto margins were “slightly up on last year but still a little bit below some of the benchmarks”, SocGen said.
You’re reminded that this comes on the heels of a rough patch for a space (automakers) that are attempting to navigate accusations of collusion.
Meanwhile, tobacco stocks were hit hard on this:
- FDA to Seek Cutting Cigarette Nicotine to Nonaddictive Levels
There are of course details, but I’m not sure you really need them. That’s about like taking the alcohol out of liquor. The reaction was, well, bad:
Additionally, Amazon weighed on European tech.
The following chart is useful in terms of getting a sense of things:
Broadly, the EuroStoxx 50 was off about 0.8% on the session:
Do note that the DAX fell again, and is now down more than 2% since last Friday’s automaker-driven decline. Deutsche Bank and Bayer weighed heavily this week as well:
All of this is set against a backdrop of a surging euro.
And while all kinds of folks have gone out of their way to explain why a stronger currency need not necessarily derail things for European equities, all you have to do is look at the following chart to see that stocks seem to be getting a bit impatient with the common currency’s seemingly inexorable ascent: