The optimism that defined much of May and the start of June was nowhere to be found on Tuesday, the markets retreating from their recent highs as German exports fell off a cliff.
With exports down 24% in April, and the country’s trade exports shrinking to just €3.2 billion, a quarter of what it was a month prior, Germany’s economic situation was enough to spark a wave of fear across the West.
For a while investors have been firmly focused on any shred of positivity they could, culminating in their ecstatic celebration of last Friday’s shock nonfarm jobs creation.
Well, with the Nasdaq and Dow Jones striking all-time and 15-week highs on Monday night respectively, it appears that – for today at least – the rally has gone far enough.
The Dow dropped 250 points after the bell, sending the index back to 27300. It will be interesting to see, however, what the index does once the European session comes to a close. Freed from that negativity, the Dow could well recoup some of its losses.
The DAX was down 1.7%, off the day’s lows by around 120 points, with the CAC in a similar situation, falling 1.6% but 50 points above its midday nadir.
The FTSE losses, on the other hand, only intensified. The UK index dropped 140 points, sinking under 6350 as its banking sector freaked out. RBS (LON:RBS) fell 7.1%, with a 5.2% decline for Lloyds (LON:LLOY), a 5% slide from Barclays (LON:BARC) and a 3.9% for HSBC (LON:HSBA).
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