Paris: Europe’s main stock markets slid yesterday as investors still rattled by last week’s turmoil pondered China’s slowing economy and potential US interest rate moves.
The CAC 40 in Paris shed 0.47 percent to 4,652.95 points in mid-afternoon trading, and Frankfurt’s DAX 30 gave up 0.38 percent to 10,259.46 points compared with Friday’s close.
London’s stock exchange was closed for a national holiday.
Global equities were hammered last week as risk-averse investors dumped shares amid panic that the flagging Chinese economy — the world’s second largest — could spark a new worldwide recession.
Markets took much of that back in late-week gains on encouraging US economic news.
But European stocks ended August with their worst month in four years. The DAX fell by 9.3 percent over the month, the CAC dropped by 8.5 percent and the FTSE 100 in London shed 6.7 percent.
Lingering concerns about China and comments over the weekend by US Federal Reserve officials left analysts yesterday split over whether the US Federal Reserve would raise interest rates for the first time since 2006 next month.
In a speech at a conference on monetary policy in Jackson Hole, Wyoming, the Fed’s number two Stanley Fischer said: “We should not wait until inflation is back to two percent to begin tightening.”
He added, however, that the Fed needed to “consider the overall state of the US economy as well as the influence of foreign economies on the US economy as we reach our judgement on whether and how to change monetary policy.”
Interpretation of Fischer’s comments varied greatly. “Despite the recent market turbulence, it would appear that an interest rate increase in September still remains on the cards. It continues to depend on the strength of incoming economic data, of which the (US) employment report at the end of this week is the most important,” said Juliet Tennent, an economist with brokerage Goodbody of an official jobs report due on Friday.
But financial services company Cantor Fitzgerald in a note insisted “a move in September is firmly off the table given recent volatility... (we) believe December at the very earliest is more likely at present.”
US stocks fell modestly, after surviving last week’s extreme China-driven turmoil with net gains. After trading lower all day, the Dow Jones Industrial Average finished down 0.69 percent, while the S&P 500 lost 0.84 percent and the Nasdaq Composite gave up 1.07 percent.
Nervousness still pervaded Wall Street after last week’s roller-coaster trade, and as some analysts continued to argue that US equities are generally overvalued.
Over the weekend Nobel economics laureate Robert Shiller, known for his sober analyses of market trends, wrote in The New York Times that based on price-to-earnings ratios, US markets are priced well above the long-term average despite the losses of recent weeks.
The suspense over rates helped lift the euro to $1.1216 on Monday from $1.1188 late Friday. Asian markets were mostly dragged lower by Shanghai resuming last week’s decline to finish down by 0.82 percent. Tokyo stocks fell 1.28 percent while Sydney lost 1.07 percent. AFP
