European Equity Benchmarks Close Lower; Financials, Automotives Weigh Down Markets

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The broad-based major European indices closed lower in Friday trading led by falling financial and automotive stocks.

In economic news, the number of newly created enterprises in the European Union (EU) as a proportion of the total number of active EU enterprises was 9.8% in 2016, slightly higher than the corresponding figure in 2015 (9.6%), according to Eurostat, the statistical office of the European Union. The highest creation rates were in Lithuania (18.8%), Malta (16.4%) and Latvia (16.2%), and rates that were close to the EU average were in Spain, France and the Netherlands. The lowest enterprise creation rates were in Greece (4.5%) and Belgium (6.2%).

According to the most recent KPMG and REC, UK Report on Jobs, rising economic uncertainty and ongoing candidate shortages weighed down UK labor market performance at the start of 2019. The data also showed that worker availability to take up new roles continued to decline, which was mainly attributed to high UK employment levels, and a hesitancy among workers to switch positions due to Brexit uncertainty. Pay pressures subsequently remained high, with salaries and temp wages both increasing strongly since December.

"With Brexit just days away now, it's definitely a nervous time for recruiters," said James Stewart, vice chair at KPMG. "January marked the first fall in permanent staff appointments since the referendum and we've seen a sharp decline in the number of candidates entering the jobs market. This is pushing up starting salaries at historically strong rates."

Meanwhile Germany exported goods worth EUR1.318 trillion ($1.49 trillion) and imported goods worth EUR1.09 trillion in 2018, according to the Federal Statistical Office (Destatis). German exports increased by 3.0% and imports by 5.7% year on year. Exports and imports in 2018 exceeded the record highs recorded in 2017 when goods worth EUR1.28 trillion had been exported and EUR1.03 trillion was imported.

The foreign trade balance showed a surplus of EUR227.8 billion in 2018. In 2017, the surplus of the foreign trade balance was EUR247.9 billion.

Desatis also reported that turnover in the main construction industry in November 2018 was up 9.2% compared with the same month the previous year. At the end of November 2018 the number of persons employed by main construction industry entrepreneurs was up 2.5% compared to the level a year earlier.

In France, private payroll employment increased 0.1% in Q4 2018, at the same pace than in the previous quarter, according to the Institute for Statistics and Economic Studies (INSEE). Year on year, private payroll employment slowed down, rising only 0.5% after increasing 1.0% in Q3 of 2018. Private payroll employment slowed down a little in construction, rising 0.2% after gaining 0.4% the previous quarter, and fell slightly back in industry, falling 0.1% after remaining flat in Q3.

INSEE also reported that output in December rebounded in the manufacturing industry, rising 1.0% after falling 1.5% in November, as well as in the whole industry (+0.8% after -1.5%). Manufacturing output declined over the previous quarter (-0.4%), as well as in the whole industry (-0.5%).

And in Italy, Q4 GDP decreased with respect to the previous quarter for the second time in a row conditioned by the negative performance of domestic demand, according to the Italian National Institute of Statistics (Istat).

In the labor market, employment stabilized and the unemployment rate decreased only marginally. In January, the consumer confidence improved while the composite business climate indicator decreased further. The leading indicator experienced a sharp fall suggesting a worsening of the Italian cyclical position in the coming months.

Istat also reported that the seasonally adjusted industrial production index decreased 0.8% in December compared with the previous month. The percentage change of the average of the last three months with respect to the previous three months was -1.1%. The calendar adjusted industrial production index decreased 5.5% compared with December 2017.

In equities, turnaround firm Melrose Industries led the FTSE lower in London falling 5%, followed by travel company TUI, and financial services firm Hargreaves Lasndown, which lost 4.3% and 4.2% respectively. Insurance company Prudential and investment manager Standard Life Aberdeen dropped 2.7% and 2.6%, while asset manager Schroders, and cruise line operator Carnival were off 2.2% and 2.1%.

In Frankfurt, internet company Wirecard helped push the DAX into negative territory tumbling 12.5%, followed by industrial group Thyssenkrupp, and tire maker Continental, which dropped 4.4% and 2.7% respectively. Deutsche Bank moved 2.6% lower, while automakers Daimler and BMW were off 2.5% and 2.4%.

And in Paris, banks helped weigh down the CAC as Credit Agricole, Societe Generale, and BNP Paribas fell 3.2%, 2.8%, and 2.3% respectively. Auto parts supplier Valeo, and steel and mining company ArcelorMittal led the decliners, losing 5.3% and 4.9%, while industrial conglomerate Bouygues, and tire maker Michelin dropped 3.1% and 2.5% respectively.

The FTSE lost 0.32%%, the DAX fell 1.05%, and the CAC-40 dropped 0.48%.

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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