After an incredibly strong first week of June, Europe had a crisis of confidence on Tuesday, questioning the market’s recent rally.
It appears the collapse in German trade – exports plunged 24% in April, while the country’s trade surplus saw a staggering decline, from €12.8 billion to €3.2 billion month-on-month – has sparked Europe’s rather significant wobble.
Even a better than forecast Q1 GDP reading out of the Eurozone failed to help assuage investors’ fears. And that’s fair enough – after all, the 3.6% slump may not be as bad as the initial 3.8% reading, but it is still the worst quarterly contraction on record for the region.
The DAX plunged 270 points, sinking towards 12560, while the CAC shed 2.1% to fall the wrong side of 5075. As for the FTSE, a 120 point decline left it just above 6350.
All this comes after a stellar Monday session in the US, one that saw the Nasdaq hit an all-time high and the Dow Jones reach a 15-week peak.
Those long- and short-term records, however, may well have inspired Tuesday’s losses. Investors might be questioning the wisdom of such highs in a world still very firmly in the middle of a pandemic.
The Dow Jones looks like it has been infected by Europe’s concerns. The futures have the index losing 300 points when trading gets underway stateside, a decline that would send the Dow back under 27300.
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