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European Stocks Rally, Diverging From U.S. Tech Slump

European stocks rallied on Wednesday, beating a U.S. marketwide selloff as investors looked to the continent for bargains and sought out companies more insulated from trade disputes.

The Dow Jones Industrial Average tumbled 1.67%, the S&P 500 slipped 0.63% and the Nasdaq Composite was down 0.97%. Thursday, the losses were a tad more tempered as the Dow turned positive 0.14% to 27,177.34 and the S&P 500 rose 0.01% to end at 2,721.25, and the Nasdaq slipped 0.06% to close at 7,488.44.

A handful of European stocks were among the day’s best performing industries, including education and engineering conglomerate Interserve (IRV.L) and shares of aerospace and defense heavyweight Airbus (AIR.PA).

Shares of food-supply maker Smithfield Foods (SFD.N) rose 10.6% to $30.37, after sales topped market expectations and the company announced a new share buyback plan.

European companies were also rallying as investors focused on domestic-focused companies with less global exposure.

While Europe’s second-largest e-commerce player Alibaba (BABA.N) was punished by investors on Tuesday for highlighting the trade war as a driver of weakness, they came to regret the decision, sending shares down 3.7% during Wednesday’s session. Alibaba rose about 2% to end the session at $93.60.

Alibaba’s success didn’t stand in stark contrast to its European peers, including Amazon (AMZN.O), which slid nearly 7% to $1,644.92.

Across the Atlantic, Japanese stocks rallied to close 1.7% higher, led by gains in semiconductor-related stocks such as Tokyo Electron (8035.T) and Advantest (6857.T).

Asian stocks had a mixed start to the week. The Shanghai Composite closed nearly flat after gains in consumer staples and financials were offset by losses in internet stocks such as Alibaba, video game maker NetEase (NTES.O) and online retailer JD.com (JD.O). In Tokyo, the Nikkei 225 rallied 1.7% to 22,745.22, after a 2.1% drop on Monday triggered a change in foreign-exchange trading limits.

The offshore yuan sank by 0.09% to 6.9145 per dollar in Hong Kong, the first loss in three days. It inched up to 6.9532 in Shanghai.

Germany’s DAX surged 2.3% to 12,316.62, even as its major banks weighed on indexes with growing concern over a trade dispute with the United States. Deutsche Bank (DBKGn.DE) tumbled 8.7% to 24.26 euros after trading at its lowest since the height of the financial crisis, while Commerzbank (CBKGn.DE) declined 1.8% to 5.10 euros as its new CEO said it should be included in European Union plans to extend capital markets operations.

The Stoxx Europe 600 index rallied 2.3% to 341.16.

Spotlight

Another area of great interest, especially as the DJIA and S&P 500 continue to languish in a near two-year downtrend, is the U.S. equity market’s rise across the globe. Last week, the DJIA rose 5.4% across all countries except the country of Mexico (DJEMMX). The other countries that saw gains were Australia (DJARMX), China (DJCNY), Germany (DJEW), India (NYSEINDY), Japan (NYSEJAPAX), Hong Kong (HKSEIFF), the U.K. (STOXXALL400), and Taiwan (NYSETHAI).

To compile the International equity performance data tables above, News Western Media utilizes data from the Stoxx Europe 600 Indexes and iShares EAFE ETF (EFA). The Stoxx European indexes are calculated using 30-month rolling averages. To calculate the daily return for the respective country indexes, the Stoxx Europe South Africa (STOXXJX) and Ireland (STOXXE) indices are combined and adjusted for day-to-day change in market value. The Stoxx Spain (STOXXSPI) and Sweden (STOXX S&P Germany) indices are combined and adjusted for day-to-day change in market value.

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