European stocks close lower as geopolitical worries remain on traders radars

European stocks ended lower on Monday, as traders weighed the limited strikes on the Syrian regime over the weekend and the potential for additional U.S. sanctions against Russia.

Shares in Whitbread PLC surged after a U.S. activist hedge fund increased its stake in the British hotel and coffee-shop operator, but drops for Software AG and Polymetal International PLC helped put the brakes on the Stoxx Europe 600.

What are markets doing?

The Stoxx Europe 600
SXXP, -0.39%
dropped 0.4% to close at 377.74, pulling back after achieving three up weeks in a row.

The pan-European gauge continues to show a year-to-date fall, down 2.9%.

Frances CAC 40
PX1, -0.04%
shed less than 0.1% to 5,312.96, while Germanys DAX 30
DAX, -0.41%
fell 0.4% to 12,391.41.

The U.K.s FTSE 100
UKX, -0.91%
slid 0.9% to 7,198.20 as the pound
GBPUSD, +0.5970%
rallied to $1.4323 from $1.4239 late Friday in New York.

The euro
EURUSD, +0.3812%
rose to $1.2368 from $1.2331 on Friday.

What is driving the market?

The key geopolitical concern for investors in recent days has been a conflict between Syria and the U.S. and its allies.

Syrian armed forces on Sunday unleashed airstrikes against rebels and shelled what rescue workers said were civilian homes, as President Bashar al-Assad sought to demonstrate his regimes continued strength following the U.S.-led missile attack earlier in the weekend. Expectations for the Western strike had been building since a suspected chemical-weapons attack killed civilians in Syria more than a week ago. Analysts have worried about the U.S. ending up in a conflict with Russia, which backs the Middle Eastern nations regime.

The U.S. has said it would launch a round of fresh sanctions on Russia and target companies tied to the Syrian regime and its chemical weapons. However, analysts said the missile attack over the weekend was considered a one-off, calming fears of a wider conflict.

Read: Russian stocks slip as traders brace for another round of U.S. sanctions

What are strategists saying?

The avoidance of World War 3 has created an eerie calm across the markets. The limited and targeted strikes in Syria that provoked no serious response from Russia were a relief to markets that were pricing in escalation, said Jasper Lawler, head of research at London Capital Group, in a note.

Stocks fell across Europe but that may have been more a function of a resurgent euro than concern about Syria. If it really is Mission Accomplished as Trump says, markets can stop worrying and move on. We are now looking for signs the market can finally refocus on strong earnings without the geopolitics, he added.

A perfectly executed strike last night. Thank you to France and the United Kingdom for their wisdom and the power of their fine Military. Could not have had a better result. Mission Accomplished!

— Donald J. Trump (@realDonaldTrump) April 14, 2018

Which stocks are in focus?

Whitbread shares
WTB, +7.19%
jumped 7.2% after Elliott Management said in a statement over the weekend that it has amassed a stake of more than 6% in Britains biggest hotel and coffee-shop operator. Elliott also said it believes its currently the largest investor in the company, whose businesses include the Premier Inn chain and Costa Coffee chain.

The development is viewed as adding to the pressure on Whitbread to spin off its Costa Coffee business because the U.S. activist hedge fund is among the shareholders that has called for that type of move, according to multiple published reports.

Software AG
SOW, -5.98%
fell 6.1% after the German provider of process and integration software late Friday raised its 2018 outlook for revenue tied to cloud computing and the so-called Internet of Things. But the company also disclosed a decline in first-quarter revenue for another business.

POLY, -9.53%
tumbled 9.5% after the Russia-based miner said it would swap its Tarutin gold deposit in that country for 85% of Russian Copper Co.s copper-gold East Tarutin deposit in Kazakhstan. The London-listed stock is down 15% so far in April, as Russian-related assets have suffered a selloff following another round of U.S. sanctions against Russian entities and individuals.

WPP shares
WPP, -6.48%
fell 6.5% after its longtime chief executive, Martin Sorrell, resigned from his job of the advertising heavyweight.

Sorrell stepped down in the face of a company investigation into an allegation of personal misconduct. The move ends his more than three decades of leadership at the worlds largest advertising company, which he founded.

Related Topics European Markets Europe Investing Stocks European Central Bank

Quote References SXXP -1.46 -0.39% PX1 -2.06 -0.04% DAX -50.99 -0.41% UKX -66.36 -0.91% GBPUSD +0.0085 +0.5970% EURUSD +0.0047 +0.3812% WTB +283.00 +7.19% SOW -2.56 -5.98% POLY -64.40 -9.53% WPP -77.00 -6.48% Show all references
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