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European stocks were losing ground Tuesday, beginning the second quarter of 2018 dogged by the same technology-sector and trade-war worries that hurt equity markets during the first quarter.
The moves were tracking a selloff in U.S. stocks on Monday, when European markets were closed for the Easter break. But Wall Street’s major indexes looked poised to steady Tuesday after the rough start to the month’s trading.
How markets are moving
Equity markets restarted trading after closures for the Good Friday and Easter Monday holidays.
The Stoxx Europe 600 index SXXP, -0.86% fell Tuesday by 0.9% to 367.69, led by losses for the tech and industrial sectors. The oil and gas sector clung to a small gain. On Thursday, the index rose 0.4%, but finished first-quarter trade down by 4.7%. That was worst such performance since the first quarter of 2016, according to FactSet data.
Germany’s DAX 30 DAX, -1.29% lost 1.4% to 11,930.45, set to wipe out Thursday’s jump of 1.3%, which was driven in part by gains for auto makers. France’s CAC 40 index PX1, -0.76% dropped 0.8% to 5,128.36.
Spain’s IBEX 35 IBEX, -0.83% slumped 0.7% to 9,529.00, and the U.K.’s FTSE 100 index UKX, -0.65% gave up 0.8% to 7,002.53.
The euro EURUSD, +0.0406% traded at $1.2326, up from $1.2303 late Monday in New York.
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What’s driving markets
U.S. stocks sold off on Monday, led by a fall for the tech sector, which has been under considerable pressure in recent weeks. European tech stocks followed suit as traders returned from their break, driving the Stoxx Europe 600 Technology Index FX8, -1.45% down by 1.6%.
In the U.S., the tech-focused Nasdaq Composite Index COMP, -2.74% was pushed into negative territory for the year on Monday. Amazon Inc. AMZN, -5.21% was a big focus, losing 5.2% after U.S. President Donald Trump seemed to take aim at the online retail giant.
Concerns about at trade war are still lingering as well, after China said it will slap tariffs on about 130 U.S. goods. China had warned it may issue levies in retaliation against the Trump administration’s tariffs on Chinese imports. Trade-war worries contributed to losses for equity markets worldwide last month. The Stoxx 600 closed March trade down by 2.3% for the month.
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The French bourse lost ground as rail workers went out on strike, the first of three months of rolling stoppages seen as a challenge to President Emmanuel Macron’s labor reforms. Strikes by garbage and energy workers, as well as by Air France staff, are also being staged on Tuesday.
What strategists are saying
“The current correction feels like a continuation of March’s de-rating of tech stocks, as investors revaluate future earnings potential in the sector. Tech makes up about a quarter of the market cap of the S&P 500, so it is important,” said Tom Elliott, international investment strategist at deVere Group.
“But its problems shouldn’t be bringing down other sectors. Therefore stock price falls elsewhere on Monday — for example discretionary goods and energy — are perhaps best described as ‘collateral damage,’” Elliott said in a note.
Stock movers
Among tech names in the red on Tuesday, chip makers STMicroelectronics NV STM, -3.68% and Infineon Technologies AG IFX, -2.94% fell 3.4% and 2.7%, respectively. Payment software maker Ingenico Group ING, -3.46% shed 2.9%.
Air France-KLM AF, -5.11% dropped 5.3%. The carrier said it expects to operate 75% of its flights despite the strike on Tuesday, according to Dow Jones Newswires.
Sky PLC shares SKY, +1.31% rose 1% after 21st Century Fox Inc. FOX, -1.90% proposed separating Sky News from the rest of Sky as it seeks to address U.K. regulators’s concerns over Fox’s bid to acquire the 61% of Sky it doesn’t already own.
Fox also said Walt Disney Co. DIS, -1.77% has expressed interest in buying Sky News, irrespective of whether Disney’s proposed buyout of 21st Century Fox assets proceeds.
Economic data
The final reading on the eurozone manufacturing purchasing managers’ index for March from IHS Markit was 56.6. That was unchanged from the flash estimate, which leaves the PMI at an eight-month low, on a broad-based slowdown in growth.
The U.K. manufacturing PMI from IHS Markit/CIPS came in at 55.1 in March, above the FactSet estimate of 54.7. Output growth has picked up, but an upturn in new orders has slowed, said Markit.