European stock markets retreated yesterday at the end of a volatile week for equities, with Greece’s debt problems again dampening sentiment.
London’s FTSE 100 index of leading shares ended yesterday off 0.15 per cent at 5,948.49 points. In Frankfurt, the DAX fell 1.24 per cent to 7,266.82 points and in Paris the CAC 40 shed 0.92 per cent to 3,990.85 points.
European markets initially opened higher, extending two days of gains, but retreated later in the day. “The IPO feel-good factor from (Thursday) initially filtered through in the morning session as European markets pushed higher with the FTSE 100 briefly above 6,000 (points),” said Michael Hewson, market analyst at CMC Markets.
European markets and Wall Street rose on Thursday following the successful market debut for shares in commodities giant Glencore and social network business site LinkedIn. “As the day progressed, markets began to tail off, suffering a little withdrawal after the feel-good buzz ... started to turn into a bit of a hangover,” Mr Hewson said.
Fitch downgrading its rating for Greece hit sentiment further, he said.
Fitch Ratings slashed Greece’s credit ratings by three notches to B+, deep into the speculative investment range, due to the massive challenges of correcting the country’s finances.
It said that rating was based on the expectation that the EU and IMF would provide sufficient new bailout aid to Athens and that there would be no extension of repayment deadlines on Greek government bonds.
Elsewhere in Europe, Swiss stocks slid 0.42 per cent, Lisbon dropped 0.56 per cent, Amsterdam gave up 0.74 per cent, Madrid shed 1.45 per cent and Milan fell 1.50 per cent. Brussels bucked the trend to end the day up 0.04 per cent.
US stocks opened lower as investors weighed falling profits at clothing retailers Gap and Aeropostale and faced a dearth of economic news.
At 1600 GMT, the Dow Jones Industrial Average was down 0.64 per cent to 12,524.12 points. The broader S&P 500 dropped 0.67 per cent to 1,334.64, while the tech-heavy Nasdaq Composite shed 0.74 per cent to 2,802.39.
“Disappointing earnings guidance from Gap that was blamed on higher-than-expected cost inflation, an acknowledgment from the Bundesbank that Germany’s economy is apt to slow from its hot first-quarter pace, and lingering worries about the pace of global economic growth are acting as limiting factors,” said Patrick O’Hare at Briefing.com.
Gap shares tumbled 17.2 per cent to $19.28 in early trading. The struggling chain reported a 23 per cent fall in first-quarter profit from a year ago, and warned that costing pressures were higher than expected and would “more than” outweigh retail price increases in the second half of the year.
Rival mall-based retailer Aeropostale, which also posted a lower quarterly profit, sank 18.9 per cent to $17.31.
LinkedIn, the career-focused social-networking firm that more than doubled its share price in the first day of trade Thursday, added 8.4 per cent at $102.21.