European markets skid as car emissions saga widens
April 22 2016 09:37 PM
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A visitor passes a sign inside the London Stock Exchange. The FTSE 100 index closed down 1.1% to 6,310.44 points yesterday.

AFP/London

Europe markets were subdued yesterday after a torrid week for automakers with Germany’s Daimler probing its vehicle emissions, Volkswagen announcing its first loss in 20 years and Mitsubishi suffering a rout.
Daimler limited an initial 6.6% decline to 5.1% by the close in Frankfurt after the owner of Mercedes-Benz announced Thursday it was launching an internal investigation “into its certification process related to exhaust emissions in the US” following a US Justice Department request.
The announcement came as Volkswagen said it had reached agreement with regulators to offer “substantial compensation” to US owners of some 480,000 illegally-polluting diesel cars.
The still-incalculable fallout from the scandal deepened as Volkswagen announced its first year-end loss since 1993 as it sets aside €16.2bn ($18.2bn) in provisions to cover potential fines, lawsuits and recall costs.
VW announced a bottom-line loss of €1.582bn in 2015 following profits of €10.84bn a year earlier.
Shares in the auto giant slid 1.3% at the close.
Mitsubishi Motors suffered another rout, capping a disastrous week that has seen its shares plunge more than 40% after the automaker’s shock admission that it cheated on fuel-efficiency tests.
In the eurozone, Frankfurt’s DAX 30 closed off 0.6% at 10,373.49 points while the Paris CAC 40 shed 0.3% to 4,569.66.
London’s benchmark FTSE 100 index closed down 1.1% at 6,310.44 points compared with Thursday’s close.
Renaud Murail of Barclays Bourse in Paris saw the local market at least holding a stable line in choppy times.
“It’s notable that (the market) is managing to stay close to the 4,600 point mark and not sliding back too much—compared with the start of the year. Market psychology has changed favourably,” Murail indicated.
On Wall Street, the tech-dominated Nasdaq index tumbled shortly after the open as shares in Microsoft and Google parent Alphabet sank on disappointing earnings. Midway through the session, the Dow was off 0.10%.
Alphabet lost 4.7% after reporting earnings per share that lagged analyst expectations by 46 cents, while Microsoft tumbled 8.0% as it reported a 25% plunge in quarterly profits to $3.8bn.
The euro was down against the dollar following the European Central Bank’s policy meeting on Thursday, which saw the ECB pledge more stimulus help if needed to help boost economic growth and tackle weak inflation.
“The global markets look decidedly haggard this Friday, perhaps a tad overtired from their start-of-the-week surge,” noted Connor Campbell, analyst at Spreadex traders.
Given the pollution turbulence, focus was firmly on the auto sector. Daimler’s heavy share-price slide hit also its rivals, but Volkswagen shares limited an early 3.0% fall to 1.0% while BMW closed off 1.6%.
The German emissions probe found 16 major car brands—ranging from France’s Renault to Italy’s Fiat and Japan’s Nissan—showed irregularities.
“Just as the VW fallout was beginning to come under some sort of control, Mitsubishi’s admission has reignited fears of a more widespread problem,” said Richard J Hunter, head of research at Wilson King Investment Management.
“Whilst there is no suggestion of any wrongdoing, the names of Daimler and Peugeot have also been dragged under the spotlight, with the obvious concern to investors that there may be more problems to come,” he told AFP.
French auto giant PSA Group, the maker of Peugeot and Citroen cars, said on Thursday its premises had been raided by France’s anti-fraud squad as part of a probe into emissions.
In London, the FTSE 100 down1.1% at 6,310.44 points; Frankfurt - DAX 30 down 0.6% at 10,373.49 points and Paris - CAC 40 down 0.3% at 4,559.66 points at the close yesterday.



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