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Thursday, 14 November 2019

European stock market sell-off gathers pace, Glencore halts slide

Reuters , Tuesday 29 Sep 2015
Views: 685
Views: 685

European shares fell for the second day in a row on Tuesday, with health stocks hit by a drop in their U.S. counterparts, although battered miner Glencore halted a slide in its share price.

German carmaker Volkswagen, which has been hit by an emissions data scandal, also remained under pressure with its shares falling by nearly 2 percent.

The pan-European FTSEurofirst 300 index and the euro zone's blue-chip Euro STOXX 50 index both fell by around 1 percent, following on from losses of more than 2 percent on both indexes on Monday.

The STOXX Europe 600 Health Care index was among the worst-performing equity sectors, weakening by 2.1 percent after U.S. pharmaceutical and biotech stocks fell overnight.

The U.S. biotech sector was hit after U.S. Democratic lawmakers on Monday attacked "massive" price increases of two heart drugs from Valeant Pharmaceuticals.

In Europe, British healthcare group Shire was down by 3.6 percent while Switzerland's BB Biotech retreated 2.8 percent.

"The momentum is to the downside for those biotech stocks," said Terry Torrison, managing director at Monaco-based McLaren Securities. "These are still very nervous markets, and I think that any rebound should be sold into."


Shares in Volkswagen also fell, with Hungary's Economy Minister Mihaly Varga saying on Tuesday that about 2 million of the 11 million diesel engines involved in the Volkswagen emissions scandal were manufactured at an Audi plant in western Hungary.

The plight of Volkswagen partly led brokerage Kepler Cheuvreux to cut its rating on the German stock market to "underweight" from "neutral".

Germany's DAX hit a record high of 12,390.75 points in April but has since lost ground and is now some 24 percent below those levels.

The DAX and other world stock markets have lost ground in the last few months partly due to signs of a slowdown in China, which has also hit the commodity sector since China is a major consumer of metals and oil.

The prolonged fall in metals prices has been one of the reasons behind Glencore's stock market slump. It fell nearly 30 percent on Monday but recovered slightly to rise by 7 percent on Tuesday.

Analysts at U.S. bank Citigroup said Glencore should even consider going private via a management buyout if the market rout continued, and Citi kept a "buy" rating on Glencore shares.

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