Profit-taking Saps Equity Markets

LONDON, (APP - UrduPoint / Pakistan Point News - 10th August, 2016) - Stock markets in Europe and Asia ran into profit-taking Wednesday prompted by weak data and a sliding dollar, as New York equities hung on by a thread. European equity markets sank "as investors bank some profits after markets hit recent highs and the German index entered a bull market yesterday, rising 22 percent since February", said Rebecca O'Keeffe, head of investment at broker Interactive Investor. Around 1345 GMT, Paris and Frankfurt were slightly down, while London's benchmark managed a small increase after a weaker morning. Wall Street was flat in a mixed reaction to fashion brands Michael Kors and Fossil reporting earnings, with Disney results failing to work any magic. The DAX had shot higher Tuesday to close up 2.5 percent, 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. - 'No staying power' - ====================== "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 on Wednesday 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 percent in June, after dropping 0.5 percent 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.

Tokyo stocks led most Asian stock markets lower Wednesday in lacklustre trading as the Dollar weakened against the Yen after US government figures showed a decline in productivity. Traders were cautious, with markets flitting in and out of positive territory despite a positive lead from the US, where the technology-rich Nasdaq ended at a new record on Tuesday. The Japanese unit is seen as a haven investment in times of uncertainty, but a stronger yen is negative for Japanese shares because it dampens the overseas profitability of exporters.

Tokyo closed down 0.2 percent, with Toyota, factory robot maker Fanuc and cosmetics maker Shiseido among those seeing declines. Shares in the make-up giant plummeted 7.5 percent after it cut its full-year profit forecast the previous day, blaming the yen's rise. Shanghai also eased after Tuesday's rally sparked by encouraging producer price data for July, as investors awaited the release of more economic data and corporate earnings.

- Key figures at 1345 GMT - =========================== London - FTSE 100: UP 0.1 percent at 6,858.88 Frankfurt - DAX 30: DOWN 0.3 percent at 10,662.45 Paris - CAC 40: DOWN 0.2 percent at 4,459.50 EURO STOXX 50: DOWN 0.2 percent at 3,023.13 New York - DOW: FLAT at 18,53226 Tokyo - Nikkei 225: DOWN 0.2 percent at 16,735.12 (close) Shanghai - Composite: DOWN 0.2 percent at 3,018.75 (close) Hong Kong - Hang Seng: UP 0.1 percent at 22,492.43 (close) Euro/dollar: UP at $1.1178 from $1.1115 Tuesday Pound/dollar: UP at $1.3051 from $1.3000 Dollar/yen: DOWN at 101.18 from 101.88 yen