LONDON, Feb 7 — Losses in eurozone stock markets accelerated today as a pessimistic economic growth outlook dampened sentiment and US markets opened firmly in the red.
“Yet more bad news reinforces the impression that the eurozone is headed steadily into recession territory,” noted IG analyst Chris Beauchamp.
The EU Commission, the bloc’s executive arm, said it now expects growth of 1.3 per cent in the eurozone this year, a significant cut from the 1.9 per cent it predicted only last November.
It said Europe is facing international headwinds — including Brexit fears, Italian economic woes and the global trade war — which have now taken the steam out of a post-crisis recovery in the eurozone.
“That eurozone growth downgrade (is) not helping matters, but after their recent surge markets seem quite vulnerable to an outbreak of bad news,” Beauchamp told AFP.
Sterling wobbles
London stocks, although also lower, outperformed their peers after the Bank of England left interest rates unchanged and warned of Brexit uncertainties.
The pound wobbled during the central bank’s update, but quickly recovered.
“The event got off to quite a shaky start as the central bank released its latest forecasts showing GDP growth this year suffered its biggest downward revision since August 2016,” said Craig Erlam, senior market analyst at Oanda.
“Despite that rocky start, the pound gradually recovered throughout the press conference to trade flat on the day against the dollar, having been down by more than half a per cent at one point,” he said.
Britain and the EU, meanwhile, agreed Thursday to hold more talks to try to avoid a no-deal Brexit, after a “robust” meeting between Prime Minister Theresa May and European Commission chief Jean-Claude Juncker.
A joint statement issued after the talks in Brussels said Juncker had again warned that November’s withdrawal agreement could not be renegotiated.
Wall Street down
On Wall Street, the Dow Jones index fell at the opening amid widespread profit-taking after recent gains, and as Twitter shares fell sharply after the company reported earnings.
“Also, economic concerns across the pond appear to be hamstringing sentiment, courtesy of another dose of disappointing German data and as the Bank of England cut its economic outlook after leaving its monetary policy stance on hold due to the ‘fog of Brexit’,” analysts at the Charles Schwab brokerages said.
In Asia earlier, stocks mostly rose as regional investors began to return from their Lunar New Year break, though Tokyo edged lower after Wednesday’s negative lead from Wall Street.
Most trading floors have re-opened but business remains light, with Hong Kong and Shanghai still closed, while focus turns on the resumption next week of China-US trade talks in Beijing. — AFP
Key figures around 1430 GMT
London – FTSE 100: DOWN 0.4 per cent at 7,145.75 points
Frankfurt – DAX 30: DOWN 1.7 per cent at 11,121.16
Paris – CAC 40: DOWN 1.1 per cent at 5,024.64
EURO STOXX 50: DOWN 1.1 per cent at 3,176.88
New York – Dow: DOWN 0.7 per cent at 25,218.18
Tokyo – Nikkei 225: DOWN 0.6 per cent at 20,751.28 (close)
Hong Kong – Hang Seng: Closed for a public holiday
Shanghai – Composite: Closed for a public holiday
Euro/dollar: DOWN at US$1.1337 from US$1.1362
Dollar/yen: DOWN at 109.75 yen from 109.97
Pound/dollar: UP at US$1.2998 from US$1.2932 at 2200 GMT Wednesday
Euro/pound: DOWN at 87.37 pence from 87.86 pence
Oil – Brent Crude: DOWN 19 cents at US$62.50 per barrel
Oil – West Texas Intermediate: DOWN 49 cents at US$53.53
