CSCO Cisco Systems Inc

By Avantika Chilkoti 

-- European stocks are dragged lower by a string of bad corporate news

-- Most markets in Asia also decline

U.S. stocks opened lower on Tuesday, with declines in the Dow Jones Industrial Average, the S&P 500 and the Nasdaq.

European stocks declined on Tuesday, following a spate of unwelcome corporate news on some of the region's biggest banks, chemical companies and auto makers.

The pan-continental Stoxx Europe 600 benchmark shed about 0.6%, putting it on course to fall for a third straight day, with marquee German stocks suffering some of the sharpest losses. U.S. stock futures also dipped, while over in Asia, most markets declined slightly, led by a 0.8% drop in Hong Kong's Hang Seng Index.

In Europe, the biggest decliners included BASF, which dropped about 5% after the German chemicals giant slashed its profit forecast on Monday evening, citing the continuing trade dispute between the U.S. and China as well as sluggish demand in the auto market. The warning prompted a drop in the stock of rivals such as Covestro AG , which fell 4%, and Lanxess, which declined 1.5%.

"What's not clear is whether this is the start of a structural downturn or whether it is a temporary blip," Martin Todd, co-portfolio manager of the Hermes European Alpha Fund, said of the European chemicals industry.

Deutsche Bank dropped 4.3%, extending its rout for a second day, amid growing skepticism over Chief Executive Christian Sewing's plan to cut jobs and restructure the investment bank. Smaller Danish rival Danske Bank slumped about 3.2% after it published a profit warning Monday.

There's widespread pessimism among investors about Europe, as there's little room for the European Central Bank to cut rates further, local banks are fragile and productivity gains have been sluggish, according to Peter Westaway, chief European economist at Vanguard. But Mr. Westaway says he encourages clients not to avoid stocks in the region altogether.

"European equities are actually quite attractively priced because there is so much bad news priced in and they probably unperformed for the past few years compared to other markets," he said. "The uncertainty has been removed but that still doesn't mean there aren't people out there who are just skeptical about how effective Q.E. can be," he said.

In a rare bright spot, shares in Ocado gained 9.4% in U.K. trading after investors grew more optimistic about growth prospects for the British online groceries group following its first-half earnings report.

Meanwhile, stock futures linked to the S&P 500 index declined 0.6%. The three main U.S. equity benchmarks, while still hovering near record highs, have dropped for two consecutive days after better-than-expected jobs data on Friday led investors to speculate that the Federal Reserve may take it slow in easing key interest rates.

Acacia Communications Inc. soared after Cisco Systems Inc. Tuesday said it agreed to buy the company for $70 a share in cash, or about $2.6 billion.

Inside currency markets, the pound slid 0.5% against the dollar. It now trades at $1.2448 to GBP1, or close to the weakest level since January, as investors digest disappointing economic data that came out this week.

"The final leg of support for a Brexit riddled economy looks to have been swiped away overnight as the BRC Sales Monitor points to a third consecutive decline in official retail sales figures, cementing the prospect of a negative Q2 GDP reading," Simon Harvey, a currency market analyst at Monex Europe, said in a note to clients.

Investors globally are also poised for fresh commentary from U.S. Federal Reserve Chairman Jerome Powell and his deputy, Randal Quarles, that may provide important signals on the chances of rate cuts this year.

Pete Gunning, global chief investment officer at Russell Investments, is among those investing carefully -- "thoughtfully doing nothing," he said -- in anticipation of a global slowdown. "While we are not expecting Armageddon, we are definitely late cycle," he said.

The yield on 10-year Treasurys ticked up to 2.054% from 2.030% on Monday. Yields and prices move in opposite directions.

Write to Avantika Chilkoti at Avantika.Chilkoti@wsj.com

(END) Dow Jones Newswires

July 09, 2019 09:48 ET (13:48 GMT)

Cisco Systems (NASDAQ:CSCO)
Historical Stock Chart
From Mar 2024 to Apr 2024

Cisco Systems (NASDAQ:CSCO)
Historical Stock Chart
From Apr 2023 to Apr 2024