Stocks are tumbling today in Europe after Asian shares drifted lower on geopolitical worries and concerns over the health of the world’s economy. The mood has been clouded overnight by rising tensions between Japan and South Korea and as a trade battle looms between the two nations, the Nikkei-225 index registered the biggest loss in the region with a 1.97% fall. Investors are also concerned by a poor earning season after Canon Inc. showed a 40% drop in operating profit for this year, which also strongly contributed to the Tokyo Index’s decline. Netflix also surprised with a loss in US customers this year; this is particularly concerning for investors as the US has always been the tech giant’s biggest market (44%).
In addition to all these bearish leverages, sentiment has also been dented by the worsening relationship between Washington and Beijing: trade talks have stalled, and the two blocs are struggling to find a fair way out of the HuaWei case.
In Europe, some traders are taking profit on the stock market and increasing their exposure to safe heaven assets prior to the next ECB meeting next week, as many expect Mario Draghi to confirm the central bank’s recent dovish tone. Every EU benchmark is trading lower today with the OMX-30 of Stockholm posting the worst performance so far. The SMI-20 in Zurich is the only stock index to register a positive performance as the prices are being driven by NOVARTIS with a +3.06% performance today after the company delivered a better-than-expected operating margin of 30% (vs 28.7% expected).
