European Equity Benchmarks Lower; Home Builders, Construction Suppliers, Airlines Burden Markets

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The broad-based major European indices closed lower in Monday trading as home builders, construction material suppliers, and airlines weighed down the markets.

In economic news, British Foreign Secretary Jeremy Hunt met with German Foreign Minister Heiko Maas to discuss a range of issues, though the main focus was on the UK's exit from the EU.

"When it comes to Brexit, there is now a very real risk of a Brexit no-deal by accident," Hunt said at a press conference with Maas. "And this is because, I think that many people in the EU are thinking that they just have to wait long enough and Britain will blink, and that's not going to happen."

Meanwhile, the seasonally adjusted IHS Markit Household Finance Index (HFI) rose to 44.6 in July, from 43.6 in June, to reach its second-highest level since December 2016. IHS said a continued solid increase in income from employment, combined with softer inflationary pressures helped ease the perceived strain on current finances. It also said a reduced pressure on finances led to one of the fastest rises in spending since early 2015.

"July data indicated light at the end of the tunnel for UK household budgets," said Sam Teague, an economist at IHS Markit. "Strong labor market conditions alongside a solid increase in spending activity signaled improving economic conditions and consumer confidence in the UK. Additionally, a marked improvement in workplace incomes and softer inflationary pressure provided another bright spot to the latest data."

The UK's Office for National Statistics ( ONS ) reported that first estimates of foreign direct investment (FDI) show that net earnings of FDI improved in 2017 overall, while the net stock of FDI remained stable. The ONS said the overall current account deficit in 2017 was at its narrowest since 2012, led by an increase in FDI credits that was largely due to other effects such as increased profitability, rather than exchange rate movements.

In equities, house-building companies weighed down the FTSE in London as Taylor Wimpey, Barratt Developments, and Persimmon fell 4%, 3%, and 2.8% respectively. Other major decliners included mining company Fresnillo, software firm Micro Focus International, and financial services company Hargreaves Lansdown, which lost 3%, 2.1% and 1.9% respectively. Airline operators easyJet and International Consolidated Airlines Group were off 1.7% and 1.5% respectively.

In Frankfurt, postal services provider Deutsche Post helped nudge the DAX in negative territory, falling 2.3%, followed by airline Lufthansa, and construction material supplier Heidelbergcement, which lost 2.2% and 1.3% respectively. Stock market operator Deutsche Boerse, and tire maker Continental each dropped 1.2%, while health care company Fresenius, and pharmaceutical firm Merck each closed 1.1% lower.

In Paris, IT firm Atos led the CAC lower, falling 3.8%, followed by semiconductor company STMicroelectronics, which lost 2.3%. Cosmetics company L'Oreal, and oilfield services firm TechnipFMC each closed 1.6% lower, while construction materials supplier St. Gobain, and automaker Peugeot each shed 1.2%.

The FTSE fell 0.30%, the DAX dropped 0.10%, and the CAC-40 lost 0.37%.

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

Copyright (C) 2016 All rights reserved. Unauthorized reproduction is strictly prohibited.

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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