18 August, 2009

Recovery after sell-off

European stock markets bounced back on Monday, helped by some upbeat German economic data, a day after a deep sell-off around the world sent major indexes back down to levels from the beginning of August. 

The FTSE 100 index of leading British shares was up 40.02 points, or 0.9 percent, at 4,685.03 while Germany's DAX rose 40.15 points, or 0.8 percent, to 5,241.76. The CAC-40 in France was 20.98 points, or 0.6 percent, higher at 3,440.67. 

Asia's markets recovered too but Shanghai's main market recouped only a small chunk of losses from Monday, when worries about the U.S. consumer outlook weighed on markets worldwide. Investors are aware that without the support of the U.S. consumer, which accounts for around 70 percent of the U.S. economy and 20 percent of the global economy, recovery will be muted at best. Some of those concerns were eased somewhat on Tuesday after another batch of better than expected economic data out of Germany, Europe's biggest economy. For now though, U.S. stocks are expecting to recover some of their poise later following big falls Monday. Dow futures were up 57 points, or 0.6 percent, at 9,177 while the broader Standard & Poor's 500 futures rose 7 points, or 0.7 percent to 985. 

The Shanghai index is down more than 16 percent since marking its annual high earlier this month and below its 50-day moving average, in contrast to all other major markets around the world. The S&P 500's 50-day average is 945, meaning that the broader U.S. index has room to fall if it followed China's lead. 

Not all markets rose in Asia. Taiwan's key index dived 2.1 percent and Indonesia's benchmark lost 2.6 percent and Australia's market edged down. 

The dollar was 0.8 percent higher at 95.23 yen while the euro rose 0.4 percent to $1.4127.