Stocks drop on weaker data, dollar

Pedestrians walk past an electric quotation board displaying the Nikkei key index of the Tokyo Stock Exchange in Tokyo on August 3, 2016.
Tokyo stocks extended a sell-off on global markets at the open on August 3, with a stronger yen hitting exporters and investors shrugging off a huge government stimulus package. / AFP PHOTO / KAZUHIRO NOGI

Stocks markets across Europe and Asia mostly dropped Wednesday in response to surprisingly weak French economic data and a falling dollar, traders said.

European equity markets sank “as investors bank some profits after markets hit recent highs and the German index entered a bull market yesterday, rising 22 percent since February”, said Rebecca O’Keeffe, head of investment at broker Interactive Investor.

Around 1000 GMT, London’s benchmark FTSE 100 index was down 0.2 percent.

In the eurozone, Frankfurt’s DAX 30 shed 0.5 percent and the Paris CAC 40 lost 0.4 percent compared with Tuesday’s close.

The DAX had shot higher Tuesday to close up 2.5 percent, as Germany’s trade surplus beat expectations to shrink only slightly in June after exports had returned to growth.

Focus on Wednesday switched to France, whose industrial production dropped for a second straight month in June, statistics bureau Insee said, alarming analysts who had been looking for a modest increase.

Output fell 0.8 percent in June, after dropping 0.5 percent in May, with oil refining posting the largest single decline after strikes in France’s oil industry.

“The broad-based decrease in industrial output, again fuelled by unions’ strikes, raises some questions on the strength of the French recovery,” said Olivier Vigna, an economist at HSBC.

Tokyo stocks led most Asian stock markets lower Wednesday in lacklustre trading as the dollar weakened against the yen after US government figures showed a decline in productivity.

Traders were cautious, with markets flitting in and out of positive territory despite a positive lead from the US, where the technology-rich Nasdaq ended at a new record on Tuesday.

The Japanese unit is seen as a haven investment in times of uncertainty, but a stronger yen is negative for Japanese shares because it dampens the overseas profitability of exporters.

Tokyo closed down 0.2 percent, with Toyota, factory robot maker Fanuc and cosmetics maker Shiseido among those seeing declines.

Shares in the make-up giant plummeted 7.5 percent after it cut its full-year profit forecast the previous day, blaming the yen’s rise.

Shanghai also eased after Tuesday’s rally sparked by encouraging producer price data for July, as investors awaited the release of more economic data and corporate earnings.

– Key figures at 1000 GMT –
London – FTSE 100: DOWN 0.2 percent at 6,839.31

Frankfurt – DAX 30: DOWN 0.5 percent at 10,642.22

Paris – CAC 40: DOWN 0.4 percent at 4,450.68

EURO STOXX 50: DOWN 0.3 percent at 3,021.54

Tokyo – Nikkei 225: DOWN 0.2 percent at 16,735.12 (close)

Shanghai – Composite: DOWN 0.2 percent at 3,018.75 (close)

Hong Kong – Hang Seng: UP 0.1 percent at 22,492.43 (close)

New York – DOW: UP less than 0.1 percent at 18,533.05 (close)

Euro/dollar: UP at $1.1180 from $1.1115 Tuesday

Pound/dollar: UP at $1.3056 from $1.3000

Dollar/yen: DOWN at 101.38 from 101.88 yen

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