Gloomy Day for European and Asian Stocks

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Gloomy Day for European and Asian Stocks
Gloomy Day for European and Asian Stocks

Gloomy Day for European and Asian Stocks

After reaching the highest level in the last four weeks, European stocks declined amidst the news that U.S. lawmakers are still not able to reach onto any solution for the federal government’s debt limit. U.S. According to investors luxury goods stocks are among the worst performers in today’s trading in the European stock markets.

Whereas Danone declined 3.6 percent after posting the slowest sales growth in 16 quarters, LVMH Moet Hennessy Louis Vuitton SA dropped 5 percent. Danone reported lower full-year forecast which demoralized the investors to a great extent. On the other hand, LVMH Moet Hennessy Louis Vuitton SA reported revenue for the third quarter that fell short of analysts’ estimates; this impacted its share value to some extent.
Fitch Rating Puts U.S. on Watch

A great impact was seen when Fitch Ratings put the U.S. on watch for a possible credit downgrade late yesterday and due to which the Stoxx Europe 600 Index retreated 0.3 percent to 313.93 in London. Standard & Poor’s 500 Index futures however gained 0.5 percent on comparatively gloomy trading day.

Asian Stocks See a Fall after Bullish Trading Yesterday

The MSCI Asia Pacific Index slipped less than 0.1 percent which again according to investors is due to the loggerhead the U.S. government is in about its debt ceiling. Investors believe that though U.S. lawmakers resumed talks to avoid a default ahead of tomorrow’s deadline to raise the debt ceiling, it is all uncertain.

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Japan Increases Sales Tax

Japan Tobacco Inc., Asia’s largest listed cigarette maker, was a major loser in today’s trading as its stocks declined by 2 percent. It is to be noted that Japanese government has increased sales-tax which will affect the prices of goods and items, particularly tobacco products. The sales-tax increase is aimed to rein in the world’s biggest debt burden without negating efforts to end deflation.

Another major loser was Techtronic Industries Co., it fell 3 percent in Hong Kong. Techtronic Industries Co. which makes power tools that gets about 73 percent of sales from North America is facing huge challenges; it will have to increase its sales in non-American markets to recover the losses. The major gainer was GungHo Online Entertainment Inc. which jumped 16 percent in Tokyo.

GungHo Online Entertainment is the same company that agreed to buy 51 percent of Finland’s Supercell Oy; the decision seems to have boosted its shares. Except for Japan, MSCI’s broadest index of Asia-Pacific shares slipped 0.1 percent.

To contact the reporter of this story: Jonathan Millet at john@forexminute.com