Profit-taking causes European stocks to fall.
Despite the eurozone’s economic recovery, Europe’s major stock markets fell Friday, followed Asia lower as investors digested earnings and took profits from significant gains the day before.
London equities were down 0.9 percent at midday, with IAG, the virus-hit airline group, down 7.0 percent after reporting a 2.0-billion-euro first-half loss.
Despite encouraging economic figures, Frankfurt fell 1.0 percent and Paris fell 0.4 percent in early afternoon eurozone deals.
On a barrage of good company earnings and an improving economic outlook, all three indices had substantially risen on Thursday.
“There has been a lot of confidence in the markets recently, and this could just be some profit taking after a very busy period,” OANDA analyst Craig Erlam told AFP.
“It’s possible that the multiple cautions from big tech companies about their near-term outlooks this week, along with a cautious Federal Reserve and mixed data, has lowered confidence a touch moving into the summer vacation period,” he added.
The eurozone economy grew by 2% in the second quarter, according to official figures released Friday, as reopened businesses boosted activity out of the post-pandemic lull.
Europe’s expansion was stronger than that of the United States, which rose by 1.6 percent over the previous quarter, and China, which increased by 1.3 percent.
Inflation in the eurozone, on the other hand, increased to 2.2 percent, above the European Central Bank’s aim of near but below 2%.
Long-standing fears of global interest rate hikes to rein in spiraling consumer prices were reawakened, but analysts remain skeptical.
“Yes, inflation in the eurozone appears to be rising – and it will rise higher in the coming months – but base effects from Germany’s VAT cut last year are a crucial driver,” said Pantheon Macroeconomics’ Claus Vistesen.
As China’s regulatory crackdown continued to frighten investors, equities sank in Asia, setting the stage for a turbulent week to end on a bad note.
Despite a promising start on Wall Street, where traders were encouraged by statistics indicating the US economy rebounded to pre-pandemic levels in the second quarter, the losses came short of expectations.
The report lowered expectations that the Fed would start reducing its ultra-easy monetary policies.
FTSE 100: DOWN 0.9 percent at 7,015.41 points in London.
DAX 30 in Frankfurt is down 1.0 percent at 15,487.66.
CAC 40 in Paris is down 0.4 percent at 6,609.96.
At 4,089.22, the EURO STOXX 50 is down 0.7 percent.
Nikkei 225 in Tokyo is down 1.8 percent at 27,283.59. (close)
The Hang Seng Index in Hong Kong is down. Brief News from Washington Newsday.