European Stocks Pummeled on China Woes as DAX Falls Below 10,000

Global Market Turmoil From China's Yuan Devaluation
  • VStoxx Index heads for biggest weekly jump since April
  • Stoxx 600 mining shares fall to lowest level since 2009

European stocks fell for the third time in four days, mirroring declines that shook global equities in August, as they extended the worst start to a year since 2000 amid a China-fueled selloff in mining and energy shares.

Europe’s equities have tumbled 5.3 percent in the first four days of the year, and companies with the most sales in the world’s second-biggest economy are bearing the brunt. Anglo American Plc and Glencore Plc slid 8.3 percent or more today, pushing a gauge of miners to its lowest level since 2009. Carmakers fell to to the lowest since October.

Stocks around the world are in retreat as an eighth day of cuts in the yuan’s reference rate exacerbated concern that growth in China is slowing more than previously forecast. The declines are a setback for European equity bulls who had speculated that central-bank stimulus and a slowly improving economy would insulate the region from stress in Asia and North America.

“The Chinese economic outlook is getting bleaker,” said Daniel Weston, chief investment officer of Aimed Capital in Munich. “Chinese demand for European exports is weakening. In August, the Chinese said it would be a ‘one off’ devaluation, but now the market knows it is much more than that.”

The Stoxx Europe 600 Index fell 2.2 percent at the close of trading. It pared losses of as much as 3.6 percent after China’s securities regulator suspended the circuit-breaker that forced local exchanges to shut early for the second day this week. Germany’s DAX Index lost 2.3 percent to 9,979.85, trading below 10,000 for the first time since October.

The Stoxx 600 is on track for its worst week since August, when China’s yuan devaluation sparked a selloff that saw Europe’s benchmark plunge as much as 18 percent from its record. The VStoxx Index measuring volatility expectations in euro-area shares jumped 13 percent today, heading for its biggest weekly advance since April.

The DAX, whose exporters have a greater exposure to China, has tumbled 7.1 percent this week, heading for its worst loss since August. It’s down 12 percent since a November high. The benchmark entered a bear market at the height of the summer rout, before rebounding as much as 21 percent.

France’s CAC 40 Index, U.K.’s FTSE 100 Index and Switzerland’s SMI Index all lost at least 1.7 percent.

Carmakers Fall

BMW AG and Daimler AG dropped 3.8 percent or more amid turmoil in China, the world’s largest buyer of German automobiles. Volkswagen AG, already beset by an emissions-testing scandal, fell 3.3 percent, taking its weekly decline to 14 percent.

Dialog Semiconductor Plc slid 5.6 percent after a person familiar with the matter said Microchip Technology Inc. is reconsidering its interest in Atmel Corp. Atmel agreed in September to acquire Dialog.

Pandora A/S bucked the trend, gaining 4.5 percent after the Danish jeweler reported a 40 percent jump in annual sales. Randgold Resources Ltd. added 1.7 percent as investors seeking safer assets boosted gold prices.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE