European markets cautious as trade war fears linger

European markets remain subdued as Wall Street is shut and trade war fears linger Read More...

European markets remained cautious despite Wall Street closing at record highs Wednesday, as trade war concerns lingered.

Markets have been subdued with the U.S. shut for business for the Fourth of July holiday.

What’s moving the market?

China Commerce Ministry spokesman Gao Feng said existing US tariffs must be removed before a trade deal can be struck, but confirmed the two nations had restarted negotiations.

The DAX DAX, +0.05% and the Stoxx 600 SXXP, +0.00% remained flat and FTSE 100 UKX, +0.06% edged up 0.1% as the threat of trade war escalation was offset by continued optimism over Christine Lagarde’s nomination to replace Mario Draghi as president of the European Central Bank.

The selection of the International Monetary Fund managing director has bolstered expectations of further monetary policy easing later this year.

U.S. President Donald Trump, meanwhile, ramped up his rhetoric against Europe and China Wednesday, accusing the pair of playing a “big currency manipulation game” and suggesting the U.S. should employ the same tactic.

In economic data, the German construction sector continued to struggle as the latest purchasing managers index (PMI) survey reading fell for a third consecutive month to its lowest level since October last year.

Eurozone retail sales slid 0.3% month-on-month in May, calling into question the strength of the bloc’s services sector.

Speaking to MarketWatch, JP Morgan Asset Management market strategist Mike Bell said it was time for investors to “sit on the fence” given the uncertainty regarding the trade dispute between the U.S and China.

“The balance of risks is now much more two way than it has been for most of the last 10 years.

“You have downside risk from the economic data but upside risk from the fact that central banks look likely to ease.”

Which stocks are active?

British Airways owner International Consolidated Airlines (IAG) IAG, +2.96% slumped 8% and Coca-Cola’s largest European bottler Coca-Cola HBC CCH, +0.84% fell 7.5%.

U.K. house builder Persimmon PSN, -0.03% posted a disappointing first-half trading update as revenues declined to £1.75bn from £1.84bn the previous year, reflecting the softer U.K. housing market. Shares fell more than 2% before recovering.

Israel-based oil and gas producer Energean Oil & Gas ENOG, +0.00% jumped 11.7% after announcing plans to buy Italian energy group Edison’s EDNR, -1.47% oil and gas unit.