Europe’s main stock markets ended mixed yesterday, with London shares posting a late rally to end the first day following a four-day holiday with a small gain.
London’s benchmark FTSE 100 index ended the day up 0.21 per cent at 6,082.88 points. The market was closed on Friday for Britain’s royal wedding, and on Monday for a regular bank holiday.
In Paris, the CAC 40 suffered its first lost after eight sessions of gains, dipping 0.29 per cent to 4,096.84 points. In Frankfurt the DAX dropped 0.36 per cent to 7,500.7 points. French and German shares had risen on Monday in reaction to the announcement that US commandos had killed Al-Qaeda leader Osama Bin Laden, as traders sought riskier assets and mulled the possible effects on reducing instability in the world, notably in the Middle East. However that faded away yesterday.
“Investors are in risk-averse mode after yesterday’s euphoric market reaction to the death of Osama Bin Laden by US Special Forces,” said analyst Kathleen Brooks at trading site Forex.com.
“Today stocks are lower and currencies at the riskier end of the FX spectrum have come under pressure as investors remain on the side lines.”
In a dramatic announcement, the White House revealed last Sunday that US forces had killed the al-Qaeda chief behind the September 11, 2001 attacks, at his secret compound in Pakistan.
“Bin Laden’s death has no clear implications for markets in my view and I am not sure that his death necessarily means a reduction in risk premia despite initial knee-jerk reactions,” said VTB Capital economist Neil MacKinnon.
On Thursday (tomorrow), investor attention will return to interest rate decisions in the eurozone and Britain.
The European Central Bank is expected to keep its key interest rate at 1.25 per cent, but may signal a further increase amid climbing prices in the 17-nation eurozone.
And the Bank of England was forecast to keep its key lending rate at a record low 0.50 per cent amid flat economic growth.
Market watchers remain concerned that the eurozone debt crisis might threaten Spain, in the wake of bailouts for Greece and Ireland, and negotiations on a rescue for Portugal.
“Stock markets are looking a bit hung over this morning,” GFT analyst David Morrison said yesterday.
“Any relief attached to the death of Bin Laden has disappeared, and instead we are looking for a fresh catalyst to drive the markets higher.
“Equities are struggling, as traders are forced to confront the debt problems faced by the eurozone,”Mr Morrison added.
Elsewhere in Europe, Milan was off 0.37 per cent, Madrid lost 0.48 per cent, Swiss stocks gave up 0.52 percent, Lisbon dropped 0.63 per cent, and Brussels fell 0.67 per cent. Amsterdam added 0.32 per cent
US stocks were mixed at 1600 GMT as investors focused on the outlook for the US economy and digested a mixed batch of earnings reports and falling energy prices.
The Dow Jones Industrial Average rose 0.23 per cent to 12,806.38 points.
The tech-rich Nasdaq Composite shed 0.49 per cent to 2,859.30 points, while the S&P 500 index, a broad measure of the markets, dipped 0.13 per cent to 1,359.76 points.
“Traders are contemplating what lies ahead for the economy as global central bank monetary policies are diverging and US fiscal issues continue to loom over Capitol Hill,” Charles Schwab analysts said in a client note.
In earlier trading yesterday, Asian stocks also enjoyed a mixed performance amid gloom over European debt after Wall Street failed to provide any inspiration despite an initial bounce on news that bin Laden was dead.
Sydney fell 0.84 per cent and Seoul dropped 1.27 per cent, while Hong Kong scraped into positive territory. Tokyo was closed for the first day of a three-day holiday.