European equity markets plunged in today’s session, tracking sharp declines in US equities as fairly disappointing corporate earnings results weighed on market sentiment and prompted some profit taking.
The CAC, DAX and IBEX indices retreated sharply between 1% and 2.35%, while the London equity index posted modest losses, finishing the session just 0.55% lower.
On macroeconomic front, the economic data was fairly mixed. Eurozone’s GDP was reported at 0.2% in Q1 2014, missing analysts’ expectations of a 0.4% rise, despite that the German economy grew by 0.8% beating estimates.
In the US, core CPI inflation data showed a rise to 0.2% of the country’s inflation in-line with recent estimates. The NY Fed manufacturing index surged by 19% in May, suggesting improving market condition in the US manufacturing sector. Furthermore, initial jobless claims fell by 24,000 last week to 297,000, its lowest level in seven years.
In London, technology and telecommunication stocks dragged mainly the market lower. Banks and financial stocks also posted fresh losses as risk appetite remained limited.
Tomorrow, the main focus will turn to the US housing starts and building permits as well as market expectations from the University of Michigan/ Reuters survey. The euro rebounded from earlier heavy losses and consolidated around 1.37 against the US dollar.