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Published On: Wed, May 29th, 2013

European stocks stutter as fear of the Fed’ grows

European stocks declined today as investors came to the realisation that positive economic data isn’t necessarily good news. After yesterdays better than expected consumer confidence data from the US stocks rallied, leaving every major indice in Europe in the green at the end of trading. Today however there was a quick pullback from the markets as they came to the realisation that the Federal Reserve is watching.

Last week the Federal Reserve, the US central bank, chairman Ben Bernanke made comments suggesting that monetary stimulus could be withdrawn if the US economy showed signs of organic growth. Yesterday the central banks of both Europe (the European Central Bank) and Japan (Bank of Japan) made announcements, reiterating their position on their monetary easing policies — a move that some analysts are seeing as an attempt to lead US policy makers to do the same.

There is still much confusion over the comments, a week on. Some investors are still trading fairly aggressively, as if the comments were misinterpreted, while others are taking them to heart and locking in their profits from the recent rallies in anticipation of any correction that may take place.

Vinci SA lead the STOXX 50 with gains of 3.80 percent as the construction company continued its recent rally. AXA SA, Cie de St-Gobain and European Aeronautic Defence and Space Co NV helped the index resist falling further with advances of 3.19 percent, 2.40 percent and 0.91 percent respectively. Regardless of the few gainers, the index still slid by 49.33 points, or 1.74 percent.

The DAX also saw declines, retreating by 144.29 points, or 1.70 percent by the end of the session. High profile movers included Continental AG, with the tyre maker advancing by 1.48 percent, Siemens AG who advanced by 0.23 percent and Adidas AG, which saw declines of 2.54 percent.

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About the Author

- Gregory previously worked for a leading financial news publication and is now assistant news editor of financialtrading.com.

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