European stocks lost ground Monday, extending last week’s pullback, as analysts attributed the retreat in part to persistent worries about a global trade war.
The U.S. Federal Reserve’s upcoming policy decision also was viewed as helping to peel away investors from equities. Micro Focus International PLC’s stock was leading the way lower, after the British software maker warned on its outlook and said its CEO has resigned.
How markets are moving
The Stoxx Europe 600 index SXXP, -0.52% fell 0.6% to 375.49. The pan-European equity gauge gave up 0.8% last week, having erased part of its weekly loss by gaining modestly on Thursday and Friday.
The Stoxx 600 is down 1.1% in March and lower by 3.5% so far in 2018.
Germany’s DAX 30 DAX, -0.80% shed 0.9% to 12,279.17, and France’s CAC 40 index PX1, -0.61% lost 0.7% to 5,245.28. The U.K.’s FTSE 100 index UKX, -1.33% dropped 1.3% to 7,071.72.
The euro EURUSD, +0.2278% bought $1.2280, down slightly from $1.2291 late Friday in New York.
The pound GBPUSD, +0.9610% jumped above $1.40 and was recently at $1.4015 after the European Union agreed on the broad terms of a two-year transition period for the U.K. when Brexit kicks in next year.
Check out: Pound could surge in ‘frenetic’ week of Brexit and BOE news, ING says
What’s driving markets
Investors have been worrying this month about a potential global trade war, and central banks have the attention of markets as well, with a Fed decision on Wednesday. The trade concerns come as the Trump administration takes a hawkish stance on U.S. trade with China and moves ahead with tariffs on foreign steel and aluminum.
Read: U.S. soybeans would be China’s biggest weapon in a trade war
And see: Trump’s most market-rattling trade blasts are still to come, warns Pimco
Investors worldwide watch Fed rate policy, as higher American interest rates can make riskier assets such as stocks less attractive — and because many companies do business in the word’s largest economy.
What strategists are saying
“There is an air of caution in financial markets to start the week as traders look ahead to some key issues in the days ahead,” said Richard Perry, Hantec Markets analyst.
“Fears over trade tariffs and protectionism are never far away, whilst the Federal Reserve may be about to signal that an acceleration in its tightening program could be ahead,” he said in a note.
Don’t miss: What to expect from the new Fed dot plot on interest rates
And read: It’s time for stock-market investors to refocus on the Fed
Stocks in focus
Micro Focus shares MCRO, -55.05% dived 56% for the Stoxx Europe 600’s biggest drop. The move came after the software company said CEO Chris Hsu has resigned and warned that revenue for fiscal 2018 will fall more than previously anticipated.
Hammerson PLC shares HMSO, +23.91% soared 24% for the Stoxx 600’s largest gain after the U.K. mall owner drew and rejected a 4.9 billion-pound ($6.9 billion) takeover offer from French real-estate investment company Klepierre SA. Klepierre’s stock LI, -3.80% fell 3.7%.
Check out: This surging stock looks like a promising bet on electric cars — and it’s not Tesla
William Hill PLC shares WMH, +4.59% rose 4.4% along with other British gambling companies as a U.K. government crackdown on a key business — fixed-odds betting terminals — looked like it could be less drastic than feared.
A commission is “recommending maximum stakes on fixed-odds betting terminals should be cut to £30, not the £2 as feared,” said Neil Wilson, ETX Capital’s senior market analyst, in a note. “This should be a relief for the sector as the worst-case scenario looks to have been avoided.”
Barclays PLC BARC, +4.03% BCS, +0.86% tacked on 3.9% after the British bank said activist shareholder Sherborne Investors Management LP has acquired a 5.2% stake.
Melrose Industries PLC MRO, -0.98% on Monday lowered the acceptance condition for its hostile 8.1 billion-pound ($11.3 billion) offer for GKN PLC GKN, +0.73% and said it will pay up to £1 billion into GKN’s pension scheme over the period of ownership. GKN’s stock was up 0.6%, while Melrose dropped 1.1%.