Europe Stocks Loose Steam Ahead Of Fed News
European stock markets dropped on Wednesday as investors awaited the latest word from the U.S. Federal Reserve and digested disappointing Chinese trade data. Italian stocks were under particular pressure after a Standard & Poor’s downgrade.
The Stoxx Europe 600 index lost 0.2% to 293.97, after closing at the highest level in almost a month on Tuesday.
Among notable decliners, shares of K+S AG dropped 4.3% after UBS cut the potash maker to sell from neutral.
On a more upbeat note, shares of Burberry Group PLC jumped 3.8% after the luxury-goods firm reported first-quarter sales that beat expectations.
More broadly, investors in Europe were waiting for the U.S. Fed to release the minutes from its June policy meeting at 2 p.m. Eastern Time, with any hints of the central bank’s plans to taper its stimulus program expected to be scrutinized.
“The message [from the meeting] was surprisingly hawkish in the sense that Bernanke was very explicit in indicating that [quantitative-easing] tapering could start later this year and possibly be terminated as soon as mid-2014,” analysts at Danske Bank said in a note.
“Some FOMC-members have since attempted to soften the message in statements, so it will be interesting to see to what degree there is consensus among the FOMC-members,” they added.
Later in the day, Fed Chairman Ben Bernanke will speak to a conference of prominent economists to discuss the Fed’s first 100 years, expected to start shortly after the markets close at about 4:10 p.m. Eastern Time.
China trade data disappoint
Also in the spotlight on Wednesday, China’s trade data disappointed, as exports unexpectedly fell in June from a year earlier, marking the first year-over-year drop for exports since January 2012. Imports decreased 0.7%, below a Reuters estimate of an 8% rise.
Chinese stocks, however, ended the day higher, although the benchmark indexes in Japan and South Korea closed in negative territory.
U.K. mining firms reacted negatively to the Chinese data, as any worries about economic expansion in the world’s growth engine tend to spark fears it’ll demand less natural resources.
Shares of Rio Tinto PLC dropped 1.4% and BHP Billiton PLC shaved off 1.2%.
The FTSE 100 index lost 0.5% to 6,483.05.
Italian stocks were also under selling pressure after Standard & Poor’s lowered the country’s sovereign debt rating to BBB late Tuesday, to reflect softening economic conditions. The FTSE MIB index traded 1.1% lower at 15,613.10.
Among other country-specific indexes, France’s CAC 40 index fell 0.4% to 3,826.78.
Germany’s DAX 30 index gave up 0.4% to 8,028.89.
Curbing losses for the German index, shares of Software AG picked up 5.6% after Morgan Stanley lifted the firm to equal weight from underweight. Additionally, Barclays lifted the firm to overweight from equal weight.
Outside the major indexes, Danish insurance firm Tryg AS added 1.8% after reporting a smaller-than-expected drop in second-quarter profit.
Source : Marketwatch
