Mobile  |  About us  |  Photos  |  Videos  |  Subscriptions  |  RSS Feeds  |  Today's Paper  |  Classifieds  |  Contact Us
The Daily Star
WEDNESDAY, 16 APR 2014
01:15 PM Beirut time
Weather    
Beirut
22 °C
Blom Index
BLOM
1,214.01down
International
Follow this story Print RSS Feed ePaper share this
Bruised by poor U.S. data, European shares retreat
Reuters
Peter Tuchman, right, works with fellow traders on the floor of the New York Stock Exchange Friday, March 15, 2013.  (AP Photo/Richard Drew)
Peter Tuchman, right, works with fellow traders on the floor of the New York Stock Exchange Friday, March 15, 2013. (AP Photo/Richard Drew)
A+ A-

LONDON: European shares retreated from more than four-year peaks Friday as weak U.S. data prompted investors to lock in profits for the weekend and the March options expiry left the market less protected against a fall.

U.S. consumer sentiment fell to its lowest in over a year, while inflation picked up, the data showed, at odds with recent upbeat U.S. releases, which had boosted global share markets and casting doubts over the strength of the world’s biggest economy.

“What’s dragging on it today? May be the U.S. data, the weaker consumer confidence,” said James Butterfill, global equity strategist at Coutts.

Still, he did not rule out the possibility of more gains in the near term, which could keep European stocks on track for a 10th month of gains in March.

“[Central bank stimulus] in the U.S. and Japan is quite a backstop in terms of any significant downside but, saying that, we are cautious on most equity markets at the moment ... If you are concerned that markets are looking quite toppy then you could look more for dividend plays. What we are doing in portfolios is not adding to positions.”

The FTSEurofirst 300 closed down 0.4 percent at 1,203.01 points, retreating from a fresh 4-1/2-year high of 1,209.05 points set at the start of the session. The EuroSTOXX 50 fell 0.7 percent, with the move accentuated by the options expiry.

Around 3.4 million put contracts – the right to sell the eurozone blue chip index – expired on the Eurex exchange Friday, compared to just 1.8 million upside call bets.

Without the protection of puts, investors may be less willing to sit through any market weakness, preferring instead to sell at the first whiff of a correction and, thus, exacerbating any downside moves.

Activity around the expiry bolstered market volumes, as did investors preparing for a rejig in the FTSE World index series, which came into effect after Friday’s close.

The review, designed to make the indexes more closely reflect the constituents’ free floats, could spark investment flows of $12 billion globally, as tracker funds and other investors adjust their portfolios, according to estimates from Societe Generale.

Volumes on EuroSTOXX 50 were double their 90-day daily average due to the index reshuffle and the options expiry, making it the most active session since Feb. 26, when European equity markets sold off sharply in the wake of a stalemate Italian election result.

Among individual stocks, Nokia was one of the worst performers, down 3.7 percent after South Korean Samsung Electronics Co. premiered its latest flagship phone, Galaxy S4.

Corporate earnings also remained a drag, with Swiss luxury chocolate maker Lindt & Spruengli and budget fashion retailer Hennes & Mauritz shedding 2.1 percent and 1.0 percent, respectively, after results.

Around 40 percent of European companies that have reported earnings so far have undershot full year forecasts, according to Thomson Reuters Starmine data. That, coupled with a still weak domestic economy, has prompted some analysts and investors to wonder whether the market’s gains have been overdone.

“We are not bullish on Europe, not at current levels,” said Gerry Fowler, global head of equity and derivatives strategy at BNP Paribas.

“Now it’s back to economics and fundamentals, which aren’t necessarily supportive of further gains in European equities, especially with political uncertainty. So it’s going to be a bit of a wait-and-see.”

 
A version of this article appeared in the print edition of The Daily Star on March 16, 2013, on page 5.
Home International
 
     
 
european stocks / France / Economics
Advertisement
Comments  

Your feedback is important to us!

We invite all our readers to share with us their views and comments about this article.

Disclaimer: Comments submitted by third parties on this site are the sole responsibility of the individual(s) whose content is submitted. The Daily Star accepts no responsibility for the content of comment(s), including, without limitation, any error, omission or inaccuracy therein. Please note that your email address will NOT appear on the site.

comments powered by Disqus
Advertisement


Baabda 2014
Advertisement
Follow us on Facebook Follow us on Twitter Follow us on Linked In Follow us on Google+ Subscribe to our Live Feed
Multimedia
Images  
Pictures of the day
A selection of images from around the world- Tuesday April 15, 2014
View all view all
Advertisement
Rami G. Khouri
Rami G. Khouri
Silencing Ayaan Hirsi Ali’s hate talk
Michael Young
Michael Young
The presidential chess game has begun
David Ignatius
David Ignatius
China moves to the scary side of its boom
View all view all
Advertisement
cartoon
 
Click to View Articles
 
 
News
Business
Opinion
Sports
Culture
Technology
Entertainment
Privacy Policy | Anti-Spamming Policy | Disclaimer | Copyright Notice
© 2014 The Daily Star - All Rights Reserved - Designed and Developed By IDS