Comments
European shares retreated on Thursday as companies exposed to Brazil came under severe selling pressure after Standard & Poor's downgraded the country’s credit rating to “junk’’ grade.
Shares in French retailer Casino Guichard, which received about half of its 2014 revenue from Latin America, fell 4.4 per cent, while its peer Carrefour, which gets 14 per cent of its annual sales from Brazil, slid 2.2 per cent.
Other companies having a significant presence in the country like Seadrill, Banco Santander, Anheuser-Busch InBev, British American Tobacco, Galp Energia and Unilever fell between 1.2 per cent and 4.3 per cent.
“Companies, which are heavily exposed to Brazil, are clearly not good plays as the resource-dependent economy is contracting and the much-needed investments are likely to get pushed back. All these issues make Brazil a less attractive place to do business,’’ Peter Dixon of Commerzbank said.
“If you are exposed to emerging markets, you have to try to find other markets that are doing better.’’
The FTSEurofirst 300 index of top European shares was down 0.6 per cent at 1,426.91 points by 0930 GMT after rising 1.4 per cent in the previous session.
Lingering concerns about the pace of economic growth in China, the world’s biggest metals consumer, hit mining stocks, with the STOXX Europe 600 Basic Resources Index falling 1.5 per cent. BHP Billiton, Glencore and Anglo American fell 1.0 to 5.0 per cent.
China’s manufacturers slashed prices at the fastest rate in six years in August as commodity prices fell and demand cooled. The producer price index retreated 5.9 per cent in August from the same period last year, its 42nd consecutive month of decline.
“Chinese producer prices have been slowing for more than three years now so another month of declines shouldn't really come as a great surprise. But the market appears to be hyper-sensitive to Chinese economic data at the moment,’’ Laith Khalaf, senior analyst at Hargreaves Lansdown, said.
German utility E.ON fell 4.7 per cent after saying it would book a significant net loss in 2015.
On the positive side, Next rose nearly 2 per cent after Britain’s second-largest clothing retailer by sales value posted a 7.1 per cent rise in first-half profit.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.