European shares close lower amid U.S.-China trade worries; Tullow Oil down 27%

European shares closed lower on Wednesday amid concern over U.S.-China trade talks, while investors monitored comments from Federal Reserve Chairman Jerome Powell.

The pan-European Stoxx 600 was down 0.2 percent during afternoon trade, dragged down by bank shares. Commerzbank was the worst performer in the sector, down 6 percent, while Deutsche Bank slipped over 4 percent.

U.S. President Donald Trump on Tuesday claimed that the initial phase of a trade deal between the world’s two largest economies would be completed “soon” but offered no new details while branding China “cheaters.”

Powell is addressing Congress at the start of two days of hearings following the Fed’s third interest rate cut this year. In prepared remarks, he said the path of interest rates is unlikely to change as long as the economy continues to grow.

On Wall Street, equities barely moved, with the Dow Jones Industrial Average trading flat and the S&P 500 and Nasdaq indexes down only marginally.

Official data published Wednesday showed that U.K. inflation dipped to its lowest level in almost three years in October, with consumer prices rising at an annual rate of 1.5 percent, down from 1.7 percent in September and lower than the 1.6 percent forecast in a Reuters poll.

Official estimates also indicated that euro zone industrial production exceeded expectations to increase for the second consecutive month in September, rising 0.1 percent as output from France and the Netherlands offset declines in Germany and Italy.

Stocks on the move

Corporate earnings continued to affect individual stock prices, with Dutch bank ABN Amro reporting a 24 percent drop in third-quarter net profit before the bell. Shares of the bank fell nearly 4 percent.

Dan Scott, deputy CIO of Vontobel, told CNBC’s “Street Signs” that the banking stock woes were most likely tied to negative rates ahead of Powell’s testimony.

“In the rates perspective, it was clear already from Jackson Hole that the Fed is open to the fact that it can’t set rates in isolation, i.e. when Europe is in negative territory, when Japan is in negative territory, the Fed can’t have such a high policy rate,” Scott said.

“It was clear that this rate cut we just saw, the last 25 basis points, had to come, and now it’s up for debate whether we get another 25 basis points before year end,” he added, while contending that the U.S. does not need another rate cut before 2020.

Meanwhile, Danish medical technology supplier Ambu soared 25 percent after chairman Jens Bager resigned and the company proposed Lars Rasmussen as its new chairman.

At the other end of the European blue chip index, Tullow Oil endured a torrid session, tumbling 27 percent after cutting its 2019 oil production guidance.

Satellite operator SES saw its shares fall nearly 15 percent amid uncertainty around a pending auction of its C-band spectrum, which caused J.P. Morgan to downgrade the stock to neutral from overweight Wednesday morning.

Source: CNBC

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