European stocks ended last week with the longest run of weekly declines in over a year – and are poised for another setback.
Monday, October 20, 2014
Indexes fell this morning after lower-than-expected economic data led to more pessimism over the region’s financial recovery.
Europe’s benchmark index, the Stoxx Europe 600, dropped 0.9%. France’s CAC 40 fell 1.2%, the DAX of Germany declined 1.4%, Portugal’s PSI 20 lost 2.3% and the UK’s FTSE 100 fell 0.9%.
“This correction might be the symptom for something larger,” Benedict Goette, founder of asset-management firm Compass Capital AG in Zurich, told Bloomberg. “I do not expect a big positive impulse from the current earnings season in Europe. Unless a multi-day up-move develops, people will remain nervous. We’re now in the highly volatile phase of attempting to bottom, but I would expect a final bottom only by the end of October or mid-November.”
US indexes’ future uncertain
The US stock market, on the other hand, ended last week with an upswing after fluctuating from day to day, according to The Wall Street Journal. But economists are concerned that the gain could be short-lived as some troublesome factors linger.
Some analysts believe US stocks are susceptible to the lingering economic weakness in Europe and the slowdown in China. Others recognize the likelihood of continued sell-off in the near-term, but maintain confidence in the US economic recovery going forward.
One expert expressed his belief that downtrodden stocks will bounce back by the end of the year, but not without more downward movement first. Others echoed his sentiment.
“Everybody made jokes a couple years ago that the U.S. was the best-looking warhorse in the glue factory. Now it looks like we don’t belong there anymore. Our economy isn’t roaring but it is coming back,” William Hackney, senior partner at Atlanta Capital Management, told The Wall Street Journal.
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