European stock markets stumble at start of week
Europe’s main stock markets slid yesterday, dragged down by a soft opening on Wall Street and data showing that Japan’s economy is slowing down.
London’s benchmark FTSE 100 index of top companies gave up 0.26 per cent to 5,831.88 points, while in Paris the CAC 40 slid 0.27 per cent to 3,426.41 points and in Frankfurt the DAX 30 dropped 0.50 per cent to 6,909.68 points.
Milan ended down 0.11 per cent while Madrid bucked the trend to gain 0.31 per cent.
In foreign exchange deals, the European single currency advanced to $1.2340 from $1.2291 in New York late on Friday.
Official data showing that Japanese economic growth slowed to just 0.3 per cent in the second quarter set a gloomy tone to European trading, but many markets later showed modest gains after a successful eight-billion-euro Italian government bond auction.
“Markets appear to be suffering a post-Olympic hangover as the feel-good factor... gives way to the economic realities of the global economy,” said CMC Markets analyst Michael Hewson.
“The lull is expected to be short lived, in a week fairly full of some important economic data from both sides of the Atlantic.”
The EU, France and Germany release second quarter growth figures today.
The bounce from the successful Italian bond auction faded as Wall Street opened in the red.
In midday trading the blue-chip Dow Jones Industrial Average was down 0.59 per cent to 13,130.65 points.
The broader S&P 500-stock index lost 0.44 per cent to 1,399.74 points, while the tech-rich Nasdaq fell 0.48 per cent to 3,006.40 points.
“Japan gets less attention these days but is still the world’s third-largest economy,” noted Dick Green of Briefing.com.
Asian stock markets were mostly lower on the Japanese data and as dealers awaited fresh stimulus drives by the central banks of the United States, Europe and China.
Hong Kong dropped 0.27 per cent, Shanghai shed 1.51 per cent and Tokyo edged down 0.07 per cent.
The Japanese government said that April-June GDP grew 0.3 per cent from the previous quarter, sharply weaker than market expectations of a 0.7 per cent increase.
It also marked a sharp contrast from a brisk 1.3 per cent increase in the January-March period.
“There are ongoing concerns about slowing global growth as Japan’s second-quarter (growth) came in below expectations,” said GFT Markets analyst Fawad Razaqzada.
“Most investors remain convinced that central banks will respond to any economic slowdown by intervening further.”
Last week, global stockmarkets enjoyed broad gains on expectations the European Central Bank would restart its bond-buying scheme to support under-pressure economies such as those in Spain and Italy.
There were also hopes the US Federal Reserve would unveil fresh stimulus measures while another batch of poor trade figures from China on Friday increased the likelihood Beijing would also intervene to kickstart growth.