By By Sruthi Shankar and Paolo Laudani
(Reuters) – European stocks dropped to two-weeks lows on Tuesday, as lack of fresh details over China’s stimulus measures sparked a selloff in sectors linked to the world’s second-largest economy such as mining and luxury.
The pan-European STOXX 600 index was down 0.9%, as of 0758 GMT, touching its lowest levels since Sept. 23.
Luxury firms such as LVMH, Kering (EPA:PRTP), Burberry and Hermes, which draw a large part of their revenue from China, fell in the range of 2.6% to 6.3%.
Shares of spirits makers Remy Cointreau and Pernod Ricard (EPA:PERP) dropped 8% and 4%, respectively, as China announced provisional anti-dumping measures on brandy imports from the European Union.
Miners fell the most among European sectors, down 4.4%, as copper and iron ore prices dropped after initial optimism over top consumer China’s stimulus measures faded. [MET/L]
Chinese runaway stocks’ rally began losing steam and Hong Kong shares slumped as officials disappointed markets by providing only a few specific details on plans to bolster the country’s slowing economy.
“The measures that were announced were a great starting effort from China, but the market just wants to see more and China haven’t come through with that yet,” said Fiona Cincotta, senior market analyst at City Index.
“So we’ve got that classic China disappointment trade coming through where miners are tracking industrial metals lower. You’ve got the luxury stocks that are coming off.”
Investors were also wary of a wider Middle East conflict.
Oil prices slipped, but hovered close to $80 per barrel as fighting in the region intensified after Iran-backed Hezbollah fired rockets at Israel’s third-largest city, Haifa, and Israel looked poised to expand its offensive into Lebanon. [O/R]
Data showing German industrial production rose by a larger-than-expected 2.9% in August did little to lift market sentiment, with traders focused on a gloomy picture of the euro zone economy.
Traders have almost fully priced in a 25-basis-point rate reduction by the European Central Bank later this month, and see strong chances of another such move in December.
Among single stocks, Vistry plunged about 30% after the British homebuilder cut its fiscal 2024 profit outlook, hurt by increased build costs in one of its divisions.
Imperial Brands (OTC:IMBBY) rose 4.6% after the maker of Winston cigarettes forecast a growth of 20% to 30% in fiscal 2024 next generation products (NGP) revenue and announced shareholder returns of 2.8 billion pounds ($3.66 billion).
