European Equity Benchmarks Close Higher; Trump Threatens 20% Tariff on European Automobiles

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The broad-based major European indices closed higher in Friday trading as oil companies, pharmaceuticals and industrials bolstered the markets.

In economic news, US President Donald Trump threatened to levy a 20% tariff on European automobiles.

"Based on the Tariffs and Trade Barriers long placed on the U.S. and it great companies and workers by the European Union, if these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the U.S.," said Trump via Twitter.

The IHS Markit Eurozone Composite Purchasing Managers' Index rose to 54.8 in June, from 54.1 in May. Although an improvement on the 18- month low was seen in May, the June reading represented the second-weakest expansion over the past 17 months.

IHS Markit said France and Germany saw business activity accelerate in June, though with stronger service sector expansions impeded by slower manufacturing growth. Business activity growth in France rebounded from May's 16-month low, but was still the second-weakest seen over the past 10 months. Meanwhile, the increase in German business activity measured across both sectors was the second-weakest since September 2016. Elsewhere, growth picked up momentum for the second month running, but saw the weakest calendar quarter since the end of 2016

"An improved service sector performance helped offset an increasing drag from the manufacturing sector in June, lifting Eurozone growth off the 18- month low seen in May," Chris Williamson, IHS' chief business economist said. "Price pressures are also on the rise again, running close to seven-year highs. Increased oil and raw material prices are driving up costs, but wages are also lifting higher, in part reflecting tighter labor markets in some parts of the region."

In Germany, the Federal Statistical Office (Destatis) reported that price-adjusted new orders in the main construction industry in April increased a seasonally and working-day adjusted 2.6% from March. In building construction and civil and underground engineering, in establishments of enterprises with 20 or more persons, new orders increased 6.7% in nominal terms compared with the same month of the previous year.

Destatis also reported the price level of private consumption expenditure in Germany in 2017 was 5.0% higher than the average of the 28 EU member countries. Most of Germany's immediate neighboring countries' price levels continued to be higher than in Germany. The cost of living was markedly lower only in Poland and the Czech Republic.

In France, Q1 GDP in volume terms decelerated, rising 0.2% after gaining 0.7% in Q4 of 2017. Households consumption expenditures rose 0.1%, after increasing 0.2% in Q4 2017, while total gross fixed capital formation was up 0.2%, after gaining 0.9% the previous quarter. Exports fell back slightly, falling 0.3%, after rising 2.4% the previous quarter, and imports edged 0.1% lower in Q1, after gaining 0.3% in Q4 of 201.

In equities, supermarket company Ocado Group led the FTSE sharply higher, rising 3.8%, followed by biotech firm Shire, and media company Sky, which were up 2% and 1.8% respectively. Consumer goods company British American Tobacco, and clothing retailer Next were up 1.6% and 1.3%, while medical equipment maker Smith and Nephew closed 0.5% higher.

In Frankfurt, pharmaceutical company Bayer, and industrial gases provider Linde led the DAX higher, rising 2.5% and 2.3% respectively, followed by reinsurance firm Munich Re, which climbed 1.9%. Adhesive manufacturer Covestro was up 1.7%, while industrial manufacturing company Siemens, and insurance firm Allianz each closed 1.3% higher. Deutsche Bank, and health care company Fresenius increased 1.2% each.

In Paris, oilfield services firm TechnipFMC, and oil and gas company Total helped boost the CAC, climbing 5.7% and 3.3% respectively, followed by airplane manufacturer Airbus, which rose 2.1%. Pharmaceutical firm Sanofi was up 1.9%, while food processing company Danone, telecommunications operator Orange, and telecommunications, construction and media conglomerate Bouygues each closed 1.7% higher.

The FTSE climbed 1.67%, the DAX gained 0.54%, and the CAC-40 rose 1.34%.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing , Stocks , ETFs
Referenced Symbols: DAX

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