European stocks faltered Thursday after the release of dismal GDP data out of France and Germany showed no growth in the continents two biggest economies and as worries over Ukraine linger. The Stoxx Europe 600 index is down 0.4% while the FTSE100 index is broadly flat. Germanys DAX and Frances CAC40 both record mild losses while Moscows Micex index is down 0.2% as Russias aid convoy approaches the Ukraine border, creating a possible flashpoint with Kiev. Data from the Euro zone earlier showed the Germany economy contracted last quarter more than expected and France failed to grow, adding to pressure on the euro area as the Ukraine crisis and slowing inflation threaten to derail the region’s recovery. German GDP fell 0.2% from the first quarter, when it rose a revised 0.7%. French GDP stagnated in the three months through June, versus market expectations of 0.1% growth. Combined with Italy’s unexpected slide into recession, the German and French readings are likely to add pressure on the European Central Bank to expand stimulus. The euro-area recovery is already fragile, with inflation running at the slowest pace since 2009, and current ECB measures taking time to have an effect. The dismal euro zone economic data has pushed the yield of Germanys benchmark bond yield down below the 1% mark this morning, falling as low as 0.998% at one point, a new record low – there seems to be significant worry amongst traders regarding the fact that Europe continues to lag behind the recoveries in the developed world nations like the UK and US. In the US, the New York Supreme Court has ruled that the British government has a case against Societe Generale for mis-selling $34 million of mortgage products to bailout casualty Northern Rock. The court rejected the French Bank’s argument that small print made its lack of liability clear. It may be ‘Shark Week’ on the USA’s Discovery Channel, but SeaWorld seems to be up a creek without a paddle; its share price dropped by 33% after the company forecast a 6-7% drop in revenue. A range of factors have been cited as reasons for lower attendance rates; from the success of the documentary ‘Blackfish’ which criticised Seaworld’s treatment of captive Orca whales, to the recent opening of The Wizarding World of Harry Potter at Universal Studios, which Seaworld says has siphoned off visitors who otherwise might have visited its Orlando location. Bill Ackman has announced his intention to take his Pershing Square Capital Management hedge fund public later this year, in the hope that this will empower more activist investors. The hedge-fund CEO seems determined to bounce back unfazed from a recent setback in which a highly-hyped presentation aimed at taking down Herbalife misfired, with the company stock actually rising in the aftermath.
Posted on: Thu, 14 Aug 2014 09:46:54 +0000
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