Thursday, 06 May 2021 12:57 GMT

Markets edge lower as eurozone dips into recession in 1st quarter

(MENAFN - Gulf Times) US markets were hit by a bout of profit-taking on Friday, while in Europe data confirming the eurozone is back in recession dampened sentiment.
Weaker-than-expected Chinese numbers also hit at sentiment, with Asia's main equity indices closing out the week lower.
Wall Street had powered to fresh highs Thursday on news that US growth had accelerated more than 6% in the first quarter and jobless claims continued to fall to new pandemic-era lows.
US indices have also been benefiting from outsized earnings this week from tech heavyweights Apple, Facebook and Google.
But a bit of profit-taking settled in on Friday.
'US markets opened sharply lower today largely as a result of some month end profit-taking after what has been a really solid April for US stocks, with the S & P500 up over 5%, and Nasdaq up over 7%, said Michael Hewson, chief market analyst at CMC Markets UK.
Investors are also starting to worry that the rally has run out of steam.
Earnings and growth news have been 'so good that more people are finding it hard to believe it can last, said Briefing.com analyst Patrick O'Hare.
'That last thought is the essence of the ‘peak growth' narrative that is emerging as a more forceful headwind for the bull market, he said.
'You can of course advance into a headwind, only it takes more effort and time to do so. 
European stocks ended the day mostly lower following data showing that the eurozone economy fell into a second recession in less than a year in the first quarter, as slow vaccinations and pandemic lockdowns stopped a rebound.
Across Europe, London's FTSE 100 rose 0.1% to close at 6,969.81; Frankfurt's DAX 30 was down 0.1% at 15,135.91, while Paris' CAC 40 fell 0.5% at 6,269.48.
Germany was the major drag on growth in the January to March period, with exports unable to overcome a steep drop in demand by confined consumers, analysts said.
'The economic recovery was always likely to be uneven in nature, and this morning's growth figures highlighted exactly that, said IG analyst Josh Mahony, noting that Covid restrictions pushed Germany into a contraction while France grew modestly.
'However, the story of a lagging EU could soon start to shift, with the region expecting to ramp up their vaccinations to fully cover 70% of the population by mid-July, he added.
Adding to the selling pressure was a report showing slowing growth in China's factory activity owing to a global shortage of shipping containers, supply chain problems and rising freight rates.
Observers nevertheless remain upbeat about the outlook, as vast sums of government and central bank cash swirl around the world economy.
'All evidence still points to continued support from both fiscal and monetary policy against a backdrop of accelerating corporate earnings, Mark Haefele, at UBS Global Wealth Management, said.
'This reinforces our view that markets can advance further, with cyclical parts of the market — such as financials, energy, and value stocks — likely to benefit most from the global upswing.
Shares in Apple shed 0.3% after the EU formally accused Apple on Friday of unfairly squeezing out music streaming rivals through its App Store in one of the biggest-ever competition cases to hit the iPhone maker.


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