Eurozone stocks shrug off strong GDP growth figures - GulfToday

Eurozone stocks shrug off strong GDP growth figures

NY-Stock

Traders work on the floor of the New York Stock Exchange on Tuesday. Reuters

News that the eurozone economy grew more than anticipated in the first quarter failed to stir stocks on Tuesday as downbeat Chinese data soured sentiment.

The European single currency edged upwards but most markets were also preoccupied with disappointing US technology results including from Google-parent Alphabet.

Activity in China›s factories barely grew last month, indicating the world›s number two economy continues to struggle. The readings from two surveys came after a surprise jump last month that had fuelled hopes of stabilisation.

The news weighed in Asia alongside poor tech sector earnings, although Shanghai rose as investors fished for bargain shares.

«The announcements indicates that China›s economy might not be enjoying the bounce back that other reports have suggested,» said CMC Markets UK analyst David Madden.

The data was felt in London where shares fell in mining firms whose businesses are tied with manufacturing in China.

London›s blue-chip FTSE 100 index ended the day down 0.3 per cent.

«However, there was some positive news out of the eurozone, where the economy expanded at a slightly faster pace than expected,» said Forex.com analyst Fawad Razaqzada.

The overall eurozone economy expanded by a better than forecast 0.4 per cent in the first quarter, official data showed on Tuesday, dampening talk of a looming recession in Europe.

The figure exceeded the expectations of analysts interviewed by data company Factset that forecast 0.3 per cent growth.

But the good news barely helped shares in Paris and Frankfurt, which both closed 0.1 per cent higher.

Milan›s stock market gained 0.4 per cent on welcome news that Italy has emerged from recession.

In Asia, tech firms also took a hit as two of the biggest names in the sector posted disappointing earnings, dampening sentiment in markets in the region.

Alphabet reported a 29-percent drop in quarterly earnings on slower-than-expected revenue growth after US markets closed.

Its shares were down around 8.3 per cent in late morning trading in New York.

Analyst Patrick O›Hare of Briefing.com said the disappointing Google results were driving investors toward other companies.

«Basically, it is a reminder that there is an investment life out there beyond the mega-cap growth stocks,» O›Hare wrote.

Meanwhile smartphone and chip titan Samsung Electronics said Tuesday morning its operating profit plunged a worse-than-expected 60.2 per cent in January-March as sales also tumbled.

The release of Apple›s results later in the day will be nervously watched by the market with some observers suggesting a weak reading could spark more heavy selling.

The Dow dipped 0.2 per cent in late morning trading, but the tech-heavy Nasdaq fell 1.2 per cent.

Federal Reserve officials gathered Tuesday for a monetary policy meeting. They are expected to leave interest rates untouched but markets will closely scrutinize Wednesday.

Oil prices rose on Tuesday above $73 a barrel but then eased off the session high after Venezuela›s president Nicolas Maduro said military leaders remained loyal to his government despite an attempted coup that could further threaten the Opec producer›s oil exports.

Prices rose after opposition leader Juan Guaido called for military backing to end Maduro›s rule, but pared gains when Maduro countered with a statement military leaders he had spoken to showed him «their total loyalty.» Reuters witnesses said several armed men in military uniforms accompanying Guaido clashed with soldiers supporting Maduro at a protest outside a Caracas air base. But witnesses said the incident fizzled out.

«With the military backing Maduro, we›re stuck with the conditions before the coup attempt,» said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut. «The concern about hostilities is starting to come out of the market.» Brent crude futures hit a session high of $73.27 per barrel and traded 58 cents higher at $72.62 a barrel by 10:18 CST (1518 GMT), while US crude futures were at $63.32, down 18 cents a barrel.

Last week, Brent hit a six-month high above $75.

Opec member Venezuela›s oil exports have been hit by US sanctions on state oil company PDVSA and an economic crisis, helping bring Opec›s production to a four-year low, according to a Reuters survey.

Earlier, crude prices drew support from comments by Saudi Arabia Energy Minister Khalid al-Falih, who said a deal between producers to cut output could be extended to the end of 2019. US President Donald Trump has pressured Opec to raise output. Belarus said on Tuesday that months of work would be needed to restore clean oil supplies via the Druzhba pipeline.

US crude oil stockpiles were expected to have risen last week, while refined products were expected to have fallen, a preliminary Reuters poll showed. Industry group the American Petroleum Institute is scheduled to release its data for the latest week at 4:30 p.m. EDT (2030 GMT) on Tuesday. The US Energy Information Administration (EIA) is due to report at 10:30 a.m. EDT on Wednesday.

Reuters