Though Europe was able to avoid succumbing to Wednesday’s inflation fears, ballooning losses overnight in the US, and a tough session in Asia, weakened the region’s defences come the opening bell.
The Dow Jones was really dealt a hammering yesterday evening, closing 1.99%, or 681 points, lower to post its worst performance since January. This following an unexpected-yet-unsurprising surge in inflation in April, to 4.2% at the annualised rate – more than double the Fed’s target.
And with the index set to drop a further 80 points this afternoon, the Dow is soon to find itself back at 33,500, mere days after crossing 35,000 for the first time.
All this laid the scene for a gory European open. The FTSE, which was yesterday’s frontrunner thanks to the UK’s better then forecast GDP numbers, was hit by a sharp reversal from its commodity stocks. That sent the index 1.4% lower, leaving it teetering on the precipice of 6,900 and at its worst price in 3 weeks.
The DAX and CAC were right there with the FTSE, falling 1.2% apiece once trading got underway. The German bourse has now slipped under 15,000, while its French cousin is the wrong side of 6,200.
Data-wise there is little on the agenda to raise spirits, though extra scrutiny may be paid to this afternoon’s weekly jobless claims reading following last Friday’s nonfarm disappointment. Analysts are expecting another week-on-week drop, from 498,000 to 487,000 – however, these estimates are notoriously inaccurate, so there could be a lot of movement around that number.
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