European markets lose ground as banks weigh
City Index September 30, 2011 10:01 PM
<p>European markets lost ground on Friday as investors sold out of heavyweight banking stocks, forcing the FTSE 100 lower by 1.6%, whilst the DAX and […]</p>
European markets lost ground on Friday as investors sold out of heavyweight banking stocks, forcing the FTSE 100 lower by 1.6%, whilst the DAX and CAC both fell over 2%.
Banks have been the focus of the selling today as investors became concerned over a property market correction in China, which could have long lasting consequences for banks who have high lending exposures in the region. In Asian trading early this morning banks weighed on exposure concerns and in London trading today we have seen two banks with most exposures to Asia – Standard Chartered and HSBC – both weigh, with their respective share prices falling 4%-5%.
Luxury goods retailers have also seen negative share price swings today in reaction to China as shareholders continue to become concerned that the region’s high demand for luxury items is starting to wane amidst a slowdown in economic activity. Burberry shares lost another 5% today, meaning that the retailer’s share price has lost 16% in just three days’ trading. Similarly bearish moves were seen for peer luxury goods makers Swatch Group and Richemont.
With today’s session marking the end of the quarter, we could also see a number of investors looking to settle and re-evaluate their portfolios for the new quarter, which could also trigger some more choppy trading in Europe today after yesterday’s equally choppy session.
Mining shares also weighed on trading, with the sector losing another 1% on Friday, meaning that all of Tuesday’s strong bounce in mining shares has been eradicated.
The afternoon session will see investors maintain a close eye on US economic data, with personal income and spending, Chicago PMI and economic sentiment all due out in the early afternoon and likely to have a strong influence on how European trade finishes the week.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.