ShareLONDON: Euro-zone stock markets slid Tuesday as news of a shock contraction in German industrial output fanned fears over the health of Europe’s top economy. Asian equities however enjoyed a much-needed bounce Tuesday after a dour start to 2024, with Tokyo scoring a three-decade high after a rally on Wall Street. Crude futures also rebounded, one day after slumping following a sharp price cut by Saudi Aramco—which had fanned concerns that supply was outstripping demand. Yet Frankfurt and Paris stocks each dropped 0.5 percent in early afternoon European trade, while London sagged.
‘Economic underperformance’
Germany’s industrial production unexpectedly fell 0.7 percent in November, the sixth straight monthly drop, official data showed. Analysts surveyed by financial data firm FactSet had forecast stagnation. “German industrial production data serves to highlight the ongoing battle underway in Europe, with the region’s reliance on manufacturing playing a key role in driving economic underperformance,” said Scope Markets analyst Joshua Mahony.
“Long-term deterioration (is) evident from the fact that manufacturing production in Germany now stands 13 percent below its 2017 peak,” he added. Wall Street powered higher Monday, with the Nasdaq up more than two percent. Asian indices shot higher Tuesday, with Tokyo hitting its highest level since 1990, as traders mulled the Federal Reserve’s interest-rates plans ahead of Thursday’s key US inflation data.
The outlook was given a partial boost by Monday’s short-lived plunge in oil prices—a key driver of inflation—after Aramco announced a cut of $2 a barrel as it looks to regain lost market share. Global equities have stumbled into the new year as a rally at the end of 2023 came to an end on worries that investors may have been too optimistic that the Fed will slash interest rates as soon as March. Confidence was given a jolt last week when minutes from the bank’s December policy meeting showed decision-makers were happy to keep rates at two-decade highs for some time to make sure they defeat inflation. — AFP
That was followed by a forecast-busting jobs report that showed the labor market remained in rude health, reinforcing the Fed view that there was still much work to do before officials could call mission accomplished on reducing inflation. Bitcoin was sitting around $46,500, having broken $47,000 on Monday for the first time since April 2022 on bets US regulators will approve exchange-traded funds that invest directly in the cryptocurrency. — AFP
