Fiat, Ferrarri end lower after Marchionne’s exit, weighing on European stocks
European stocks ended the day lower and marked a third straight loss on Monday, as shares of Fiat Chrysler Automobiles and others came under pressure after the sudden departure of longtime chief Sergio Marchionne, while investors juggled a new round of earnings reports.
Sentiment also appeared dampened by an assessment on the impact of trade disputes on global economic growth by officials from the Group of 20 who met in Argentina over the weekend.
On national indexes, Italy’s FTSE MIB I945, -0.87% fell 0.9% to end at 21,605.21, with Fiat Chrysler and Ferrari NV among the components hit after Marchionne stepped down from his duties.
France’s CAC 40 PX1, -0.37% closed 0.4% lower at 5,378.25, and the U.K.’s FTSE 100 index UKX, -0.30% ended down 0.3% at 7,655.79. Germany’s DAX 30 index DAX, -0.10% slipped 0.1% to close at 12,547.39. In Madrid, the IBEX 35 IBEX, +0.01% ended 1.3 points higher at 9,726.10. UBS on Monday said it’s now recommending investors add long exposure to the IBEX.
The broader Stoxx Europe 600 index SXXP, -0.19% fell 0.2% to close at 384.88, with a third consecutive decline led by the tech and consumer goods groups. The telecom, financial and oil and gas sectors, however, ended higher. The index on Friday fell 0.2%, but ended last week with a third consecutive weekly gain.
The euro EURUSD, -0.1792% traded at $1.1707, pulling back from $1.1722 late Friday in New York.
Among Monday’s decliners on the Stoxx 600 were shares of companies who lost auto industry legend Sergio Marchionne as a leader, as Marchionne is being treated in a Zurich hospital for health complications after shoulder surgery.
Marchionne served as chairman and chief executive at Ferrari and Fiat Chrysler, chairman of industrial and vehicle equipment maker CNH Industrial, and as vice chairman of Exor, whose shareholdings include Fiat, Ferrari and CNH.
“Though Marchionne was due to retire at the end of the year, the development is unexpected. While investors do not like negative surprises or uncertainty, we don’t see the change in captain altering the course of the ship at [Fiat Chrysler],” as Mike Manley, Marchionne’s successor, “is an extremely experienced auto exec,” said Evercore ISI analyst George Galliers in Sunday note.
Ferrarri named Louis Camilleri as its new CEO. “Ferrari was increasingly tuned to perfection by Marchionne, and it has to be seen whether this can remain so without him,” wrote Galliers.” We do not see Camilleri’s lack of automotive experience as an issue, but Ferrari is and always has been a finely balanced machine with the various stakeholders having very strong views on what the company is.”
Meanwhile, finance ministers and central bankers of the G-20 group of countries ended their meeting in Buenos Aires on Sunday warning “heightened trade and geopolitical tensions pose as downside risks for global economic growth, which at this time “remains robust,” they said in a communique.
U.S. Treasury Secretary Steven Mnuchin told reporters in Buenos Aires that the European Union, China, and Japan must remove tariffs and subsidies before the U.S. discusses trade agreements with those regions.
Mnuchin also said “it’s definitely a realistic possibility” that U.S. President Donald Trump will follow through on a threat to put tariffs on all $500 billion worth of Chinese imports into the U.S.
“Global markets continue their malaise, as trade tensions weigh on sentiment amid fears that global growth will slow. With no major catalysts to drive the market higher, the risks are on the downside and the danger is that equity markets will drift lower. Earnings will allow individual stocks or even sectors to out or underperform, but the broader indices are likely to find it more difficult to gain traction,” said Rebecca O’Keeffe, head of investment at Interactive Investor, in a note.
“Trade issues are likely to stay in focus as an EU trade mission is due to arrive in Washington mid-week. Any signs that Trump is willing to back down from his hard-line stance with the EU could quickly boost sentiment leaving traders the opportunity to focus on the European Central Bank meeting and U.S. GDP release at the end of the week,” said Jasper Lawler, head of research at London Capital Group, wrote in a note.
The ECB meeting is scheduled for Thursday.
Following Marchionne’s departure, shares of Ferrari NV RACE, -4.88% lost 4.9%, Fiat Chrysler Automobiles FCA, -1.50% closed down 1.5%, Exor NV EXO, -3.25% ended 3.3% lower, and CNH Industrial NV CNHI, -1.70% shed 1.3%.
Ryanair Holdings PLC RY4C, -6.75% closed down 6.7% after the airline posted a 20% decline in first-quarter profit to €319 million as the company said profit was hurt in part by higher oil prices and pilot strikes.
“While we continue to actively engage with pilot and cabin crew unions across Europe, we expect further strikes over the peak summer period as we are not prepared to concede to unreasonable demands that will compromise either our low fares or our highly efficient model,” said Ryanair in its earnings report.
Atos SE shares ATO, -6.74% ended the day 6.7% lower after the French information-technology services company reached a $3.4 billion deal to buy U.S.-based Syntel Inc. Atos also said Monday first-quarter revenue rose slightly, to 2.95 billion euros ($3.6 billion), on 2% organic growth.
Julius Baer Group AG BAER, -4.01% closed down 4% after the Swiss bank posted a rise in first-half net profit but said clients are taking heed of mounting trade tensions.
“Markets had a strong and upbeat start to the year but ended the first half on a more cautious note, pondering the potential impacts of trade tensions and of an impending end to quantitative easing,” Chief Executive Bernhard Hodler said in a statement.
Ocado Group PLC OCDO, +5.54% , a British online grocery service and platform-technology provider, topped advancers on the Stoxx 600 and closed Monday trading 5.5% higher.
Source: Read Full Article