Most of the world’s main stock markets ran into profit-taking yesterday prompted by weak data, mixed earnings and a sliding dollar, but London hung on by a thread.
Frankfurt closed 0.4% down at 10,650.89 after “markets hit recent highs and the German index entered a bull market yesterday, rising 22% since February”, said Rebecca O’Keeffe, head of investment at broker Interactive Investor.
In Paris, CAC 40 lost 0.4% at 4,452.01, while London’s benchmark FTSE 100 gained 0.2% at 6,866.42 points yesterday.
Wall Street’s main Dow index was little changed at the opening in a mixed reaction to fashion brands Michael Kors, Ralph Lauren and Fossil reporting earnings, and then abruptly turned lower around mid-session.
But Disney stock worked some magic, rising after an early drop in reaction to third-quarter earnings bolstered by blockbuster films.
The DAX had shot higher Tuesday to close up 2.5%, as Germany’s trade surplus beat expectations to shrink only slightly in June after exports had returned to growth.
But dealers noted that low holiday season volumes meant that gains could unravel as quickly as they had materialised.
“Experience shows that any movement that is not underpinned by rising volumes or a catalyst has no staying power, so it’s best to remain cautious,” said Thierry Claude, a portfolio manager at Barclays Bourse in Paris.
France provided such a catalyst yesterday when industrial production in the eurozone’s second-largest economy dropped for a second straight month in June, alarming analysts who had been looking for a modest increase.
Output fell 0.8% in June, after dropping 0.5% in May, with oil refining posting the largest single decline after strikes in France’s oil industry.
“The broad-based decrease in industrial output, again fuelled by unions’ strikes, raises some questions on the strength of the French recovery,” said Olivier Vigna, an economist at HSBC.