European stocks finished lower Wednesday, as analysts fretted that U.S. military action against Syria could spook markets.
A pan-European equity benchmark continued to show a small weekly gain, helped by worries receding over the ongoing trade skirmish between China and the U.S., the world’s two largest economies.
How markets are moving
The Stoxx Europe 600 SXXP, -0.59% shed 0.6% to end at 376.18, trimming its week-to-date rise to 0.4%.
Germany’s DAX 30 DAX, -0.83% dropped 0.8% to close at 12,293.97, while France’s CAC 40 PX1, -0.56% gave up 0.6% to finish at 5,277.94. The U.K.’s FTSE 100 UKX, -0.13% fell 0.1% to end at 7,257.14.
The euro EURUSD, +0.0243% traded at $1.2384, up from $1.2356 late Tuesday in New York.
What’s driving markets
In a fresh geopolitical concern for investors, the possibility of a U.S. strike against Syrian President Bashar al-Assad appeared to be growing, with President Donald Trump and his administration working to rally international support. Talk of such a strike has been simmering since a suspected chemical-weapons attack killed civilians in Damascus over the weekend. It could draw the U.S. into a conflict with Russia, which backs the Assad regime.
Trump on Wednesday signaled that an attack using missiles was not far off. “Get ready Russia, because they will be coming, nice and new and smart!” he said in a tweet.
Meanwhile, fears about a potential global trade war have persisted for weeks. While the Trump administration exempted most countries from recent U.S. tariffs on imports of steel and aluminum, its targeting of Chinese goods has fanned fears.
Yet concerns appear to be ebbing this week, thanks to a less-aggressive stance on trade taken by Chinese President Xi Jinping in a key speech Tuesday.
What strategists are saying
“The trade tensions between the U.S. and China have eased as the geopolitical situation in Syria takes center stage,” said FxPro analysts in emailed comments.
“The markets may react to any strike with a move to risk-off sentiment,” they said.
Stock movers
Tesco PLC shares TSCO, +7.18% climbed 7.2% for the Stoxx Europe 600’s biggest gain. The U.K.’s No. 1 grocer by market share declared its first year-end dividend in four years and said that its pretax profit had increased multifold.
TGS-NOPEC Geophysical Co. TGS, +4.53% soared 4.5%, building on the prior day’s leap that came after the Norwegian oilfield-data provider posted better-than-anticipated quarterly revenue. The stock is up 19% this week.
Deutsche Telekom AG DTE, +0.18% jumped 2.2% in the wake of reports that American wireless carriers Sprint Corp. S, -0.33% and T-Mobile US Inc. TMUS, -0.33% have rekindled merger talks. The German telecom controls T-Mobile.
Air France-KLM AF, +0.05% finished little changed, giving up an earlier gain that came as the airline said it has invited unions to pay negotiations starting Thursday in a bid to end current strike action.
Barry Callebaut AG BARN, -8.38% fell 8.4% for the Stoxx 600’s largest drop after the Swiss chocolatier said revenue rose during the fiscal year’s first half. UBS analysts said there is a risk of slowing volumes in the second half, according to a Dow Jones Newswires report.
Economic news
European Central Bank President Mario Draghi cautioned Wednesday that the threat of tariffs could hit investor confidence. His comments came at a Frankfurt event that’s tied to an ECB competition for students.
The head of the International Monetary Fund, Christine Lagarde, warned in a speech in Hong Kong Wednesday that the return of protectionism risked tearing apart the current system of regulating trade.
After the European close, the minutes from the most recent meeting of the U.S. Federal Reserve are expected. The release is scheduled for 2 p.m. Eastern Time, or 7 p.m. London time.
