European shares mixed after sharp drops in Asia, U.S.

Elaine Kurtenbach, The Associated Press</span>
Published Wednesday, October 24, 2018 11:52PM EDT
Last Updated Thursday, October 25, 2018 5:22AM EDT

BANGKOK -- Stock prices were mixed Thursday in early European trading as markets settled somewhat after steep declines in Asia and the U.S. spurred by worries over trade and the U.S. economy.

Futures for the Dow Jones Industrial Average and the Standard & Poor's 500 were higher, suggesting a likely revival of buying sentiment.

Britain's FTSE 100 lost 0.3 per cent to 6,943.14 while Germany's DAX added 0.1 per cent to 11,198.04 and the CAC 40 in France climbed 0.7 per cent to 4,987.78.

It was unclear if the gains were a return to calm or only a respite from the torrent of selling on Wall Street overnight that spurred further selling of technology-related shares in Asia.

Japan's Nikkei 225 index swooned 3.7 per cent to 21,268.73. Hong Kong's Hang Seng index ended 1 per cent lower at 24,994.46 and Australia's S&P ASX 200 sank 2.8 per cent to 5,664.10.

But late in the day, the Shanghai Composite index erased its early losses to end up only 0.5 points at 2,603.80. Benchmarks in Thailand and Indonesia also logged gains.

As in New York, Asia's losses were heaviest for technology companies. Semiconductor maker Tokyo Electron lost 4.3 per cent and Taiwan Semiconductor Manufacturing Co. dropped 4.4 per cent. South Korea's Samsung Electronics sank 3.6 per cent and Japanese telecoms and energy giant Softbank lost 4.4 per cent.

Other sectors also felt the pain.

Toyota Motor Corp. gave up 2.7 per cent while Hong Kong-based retail supply chain giant Li & Fung Ltd. lost 1.3 per cent. Also in Hong Kong, airline Cathay Pacific's shares dropped as much as 6.5 per cent but ended 3.8 per cent lower after it said it had discovered a data breach affecting 9.4 million passengers.

Still, some market observers were taking the latest bout of volatility in stride.

"I think the Hong Kong market is really very close to bottom, because when you look at the value, it's very extremely cheap. So how low can it get? Maybe it will reach 24,000 before we find the bottom," said analyst Francis Lun of Geo Securities.

In New York, the futures contract for the S&P 500 gained 0.5 per cent to 2,678.70 while that for the Dow also jumped 0.5 per cent, to 24,738.00, suggesting recent losses may have whetted appetites for bargains.

The Nasdaq composite with its hefty roster of tech stocks has now fallen more than 10 per cent below its August peak in what Wall Street calls a "correction." Its 4.4 per cent tumble on Wednesday to 7,108.40 was its biggest drop since August 2011 but it is still up 3 per cent for the year.

The S&P 500 has lost about 9.4 per cent from its Sept. 20 peak and has given up its gains for the year, as has the Dow. The Russell 2000 index of smaller-company stocks is down 4.4 per cent for the year.

Disappointing quarterly earnings and outlooks are stoking investors' worries that Corporate America's tax cut-fueled earnings growth will fade in coming months as interest rates rise and the trade conflict with China raises costs.

Recent signs the housing market is cooling are adding to jitters over prospects for U.S. economic growth.

A shift into less volatile assets has pushed bond prices higher, sending the yield on the 10-year Treasury note down to 3.12 per cent from 3.16 per cent late Tuesday.

About 24 per cent of the companies in the S&P 500 had reported third-quarter results as of Wednesday. Of those, 57 per cent delivered earnings and revenue results that topped Wall Street's forecasts.

As selling in share markets abated, other markets also regained equilibrium.

Benchmark U.S. crude lost 9 cents to $66.73 per barrel in electronic trading on the New York Mercantile Exchange. On Wednesday it edged up 0.6 per cent to settle at $66.82 a barrel in New York. Brent crude, used to price international oils, gained 8 cents to $76.25 a barrel.

The dollar rose to 112.31 yen from 112.23 yen. The euro rose to $1.1410 from $1.1393.

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Katie Tam in Hong Kong contributed to this report.

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