A trader uses a telephone as she works at the Frankfurt Stock Exchange. The DAX 30 closed down 1.47% to 9,315.29 points yesterday.
AFP/London
Europe’s stock markets ended the week with sharp declines yesterday, part of a global equities sell-off sparked by poor results from the banking sector and fears of over-valuation in tech.
London’s FTSE 100 was down 1.21% compared to Thursday’s closing level, at 6,561.70 points.
Germany’s DAX 30 shed 1.47% to stand at 9,315.29 points and the CAC-40 in Paris lost 1.08% to finish the week on 4,365.86 points.
European stock markets were already in negative territory in the middle of the trading session as the tech sector continued a global sell-off but losses deepened when Wall Street opened.
US shares tumbled at the open after poor earnings results from Wall Street banking giant JPMorgan Chase—seen as a bellwether stock for the banking sector.
JPMorgan shares nose-dived after the firm reported first-quarter earnings of $5.3bn, down 19% from a year ago and missing expectations due to weak trading and mortgage results.
Shares of JPMorgan fell 3.2% to $55.57 in late-morning trading, making it the weakest-performing stock on the Dow Jones Industrial Average.
The miss also pushed shares in Bank of America and Citigroup lower but Wells Fargo, another US banking giant, saw its stock rise after beating earnings expectations.
By mid-morning, the Dow had pared its earlier losses and was down 0.45% at 16,097.43 points.
The tech-heavy Nasdaq also rebounded somewhat and was marginally in the red, down 0.04% at 4,052.62 points.
The wider S&P500 market was also lower, by 0.26% at 1,828.38 points.
“The market is just following the selling of tech stocks in the US,” said Mikael Jacoby, head of continental European trading at Oddo Securities.
“All this is happening against a backdrop of persistent instability in Ukraine,” he added.
On Wall Street, tech stocks continued their sell-off over fears of a new bubble in valuations, but the declines were less marked than on Thursday.
Google, Netflix and Facebook all registered declines.
European tech stocks were especially badly hit, with shares in German semiconductor giant Infineon diving 1.56% to 8.14 euros in Frankfurt.
British chipmaker ARM Holdings plunged 4.58% to 958 pence in London.
And Alcatel-Lucent, a leading global supplier of telecom equipment for the Internet, saw its stock slide 1.85% to 2.76 euros in Paris.
On Thursday, Wall Street’s tech-rich Nasdaq Composite slumped 3.10%—the biggest single-day percentage point drop since November 2011 - and the Dow Jones Industrial Average shed 1.62%.
The US losses wiped out a two-day rally that picked up on Wednesday when the minutes of the latest Federal Reserve policy meeting suggested no support for an early rise in interest rates.
“With technology valuations double that of other shares, questions are increasingly being asked about whether current earnings justify” the present levels of tech stocks, added Rebecca O’Keeffe, head of investment at stockbroker Interactive Investor.
“Whilst these valuation levels are not even close to those seen in previous technology bubbles, investor sentiment appears to have turned for the worse.
“The knock-on impact of the sell-off has seen markets fall aggressively and anxious investors are running for cover.”
