European stock markets lost ground yesterday as persistent concerns over Greece’s debt problems offset gains in Telecom Italia and shares in energy companies.
Traders were also reluctant to add to equity positions before a US Federal Reserve meeting, with many investors expecting the Fed to signal that US interest rates will be raised in September.
Athens' benchmark ATG equity index fell 3.2 per cent, underperforming a 0.5 per cent decline on the pan-European FTSEurofirst 300 index. Germany's DAX fell 0.6 per cent, while France's CAC declined one per cent.
Car parts maker Valeo dropped 5.4 per cent after Credit Suisse cut its price target on the stock, while Danish medical equipment maker Coloplast retreated 3.9 per cent after cutting forecasts.
But Telecom Italia outperformed, rising 0.5 per cent after sources told Reuters that Vivendi was planning to increase its stake in the firm.
A rise in Brent crude oil prices also boosted energy stocks .
Nevertheless, some traders said they would use any bounce in share prices as a cue to sell, given the concerns over Greece’s debt deadlock, which has caused Athens’ ATG market to fall for four consecutive sessions.
“We're looking to sell into strength here,” Logic Investments director Darren Easton said.
Easton said the DAX could fall 1,000-2,000 points if no deal was reached over the country's debts and Greece was forced to leave the eurozone.
Athens’ ATG index has fallen about 18 per cent since the start of 2015, underperforming an 11-per cent advance on the FTSEurofirst.
Stimulus measures from the European Central Bank have cushioned blows from Greece on other European economies.
Some investors said any Greek debt default may have a limited impact on the broader market as Greece represents only a small amount of the Euro-pean economy.
They also highlighted the ongoing monetary support from the ECB as helping to offset the impact from a ‘Grexit’, namely Greece exiting the eurozone.
“Any sell-off triggered by a Grexit scenario, we would consider a buying opportunity,” J.P. Morgan Asset Management global market strategist, Vincent Juvyns, said.
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