Member access

4-Traders Homepage  >  News

News

Latest NewsCompaniesMarketsEconomy & ForexCommoditiesHot NewsMost Read NewsRecomm.Business LeadersVideosCalendar 

European Stocks, Crude Slump; Bunds, Dollar Gain on FOMC

02/21/2013 | 05:45am US/Eastern

European stocks and crude oil prices slumped Thursday, while perceived safe-haven assets such as the dollar and German Bunds rallied as investors digested the decidedly more hawkish tone of the latest Federal Open Market Committee minutes and a series of disappointing euro-zone data.

The FOMC minutes showed officials last month were worried that the central bank's easy-money policies could lead to instability in financial markets and may be difficult to pull back in the future. Some officials said the central bank should change the pace of its asset purchases, while others argued that any easing may need to remain in place until the job market improves substantially.

Paul Ashworth at Capital Economics said the minutes "suggest that rising fears over the potential costs from further quantitative easing could prompt Fed officials to reduce or even halt the central bank's monthly asset purchases sooner than most market participants had been expecting."

He added: "As it stands now, the Fed is more likely to halt QE3 in the second half of this year rather than the first half of 2014, although a re-emergence of the euro-zone crisis later this year could put paid to the central bank's current plans."

In currency markets, the pound took the biggest beating after the release of the minutes, briefly falling to its lowest level against the dollar since July 2010.

The euro came under further pressure against the greenback following the release of disappointing German PMI surveys for February, with both the manufacturing and services indexes falling short of expectations. The single currency slid to a fresh six-week low against the dollar after the data came out, while Bunds extended gains. The same data for France and the euro zone as a whole also missed expectations.

"Today's figures are a reality check: the improvement in Europe has until now been a financial markets story, while the real economy remains in the doldrums," said ING. "More needs to happen to put the euro zone on a sustainable recovery path."

Crude oil prices fell as the greenback's rally diminished the comparative appeal of dollar-denominated resources. Still, the gold price recovered a little Thursday following steep declines in the previous session.

In equity markets, basic resources suffered the heaviest losses, with the Stoxx Europe 600 index for the sector down 2.2%. Any rise in the dollar makes commodities priced in the greenback more expensive to investors holding other currencies.

Among individual stocks, shares in French insurer AXA fell after the company reported a drop in full-year net profit and said it would implement additional cost-cutting measures.

French retailer Casino Guichard-Perrachon slipped after it posted a slight drop in underlying net profit for 2012.

Swiss Re bucked the trend, however, gaining after the company reported a 62% increase in full-year net income and said it was well positioned in 2013 despite the challenging outlook in developed economies.

In London, BAE Systems was also on the front foot after the company announced a GBP1 billion share buyback with its full-year results.

Write to Michele Maatouk at michele.maatouk@dowjones.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

React to this article
Latest news
Date Title
06:14pDJVale SA Plans to Cut Dividends Amid Low Commodity Prices -- Update
06:13p INTEL : Tech Industry Leaders Are Beginning To Accept The Diversity Challenge; U.S. Law Partners Should Do The Same
06:13p Chimerix Focusing Efforts on CMV and Adenovirus Pivotal Trials
06:11p BANK OF AMERICA : BRIEF: Ameris Bank to acquire M&S Bank, 18 Bank of America branches
06:11p Fitch Rates Johns Hopkins University's (MD) Revenue Bonds 'AA+'; Outlook Stable
06:10p SMC RECORDINGS : Entertainment, Inc. Provides Corporate Update
06:08p SOCIAL REALITY : Listed as One of the Top 20 Display Partners in Pixalate's Seller Trust Index
06:07p ECB's Praet says QE will help fend off damaging deflation
06:06p ASHFORD HOSPITALITY : NYSE stocks posting largest volume increases
06:06p ASTRO MED : Nasdaq stocks posting largest volume decreases
Latest news
Advertisement
Hot News 
BANCO ESPIRITO SANTO : Drought woes spread to another Brazilian state
BERKELEY MINERAL RESOURCES : Obsidian IR
RAMBLER METALS & MINING : Implements Revised Plan at the Ming Copper-Gold Mine
NOSTRUM OIL & GAS : Fourth Quarter and Full Year 2014 Operational Update
GREEN DOT : reports 4Q loss
Most Read News
06:01p PETROCHINA : Shell shelves plans for Arrow LNG project in Queensland
06:01p EXXON MOBIL : updates anti-discrimination employment policy
06:06p ASHFORD HOSPITALITY : NYSE stocks posting largest volume increases
06:05p KOENIG & BAUER : Enhanced productivity and profitability with KBA Service Select
06:05p GOLDEN VALLEY MINES : NUNAVIK NICKEL MINES CLOSES $250,000 PRIVATE PLACEMENT FINANCING GOLDEN VALLEY MINES PURCHASES 800,000 UNITS ($80,000) UNDER PRIVATE PLACEMENT BY NUNAVIK NICKEL MINES more...
Most recommended articles
06:07p ECB's Praet says QE will help fend off damaging deflation
06:02pDJGFI, CME Terminate Merger Agreement -- 2nd Update
06:01pDJRussia Cuts Interest Rates -- 3rd Update
05:55p GBP/USD Preserves Bearish Momentum Ahead of BoE Meeting
05:51pDJMexico to Cut Planned Spending -- Update
Dynamic quotes  
ON
| OFF