LONDON, United Kingdom – Europe’s major stock markets mostly churned lower Wednesday, January 17, as investors took their cue from downbeat sentiment in Asia, while Wall Street resumed its upward trend.
Virtual currency bitcoin meanwhile dived, falling below $10,000 for the first time in 6 weeks in what one analyst called a “cryptocalypse” that saw several digital units take a hammering.
London stocks “opened on the back foot following downward trends in the US and Asia, signalling a shift in global sentiment as traders opt to lock in profits following the latest rally,” noted Russ Mould, investment director at online stockbroker AJ Bell.
Adding to the gloom, disappointing earnings eclipsed takeover activity in the British capital.
Publisher and conference organizer Informa revealed it was in talks to buy rival UBM to create a giant worth more than £9.0 billion ($12.4 billion, 10.1 billion euros).
The deal is aimed at accelerating growth and slashing costs, the companies said in a statement. But investors were unconvinced, sending Informa shares tumbling more than 9%.
The FTSE 100 was also punished as poor results from luxury fashion giant Burberry and publisher Pearson sent the two companies’ share prices diving by seven and five percent respectively.
‘Cryptocalypse’ for bitcoin
Bitcoin fell below $10,000 for the first time since early December, as the leading cryptocurrency extended Tuesday’s 15% slump.
The fierce selling also spread to other alternative digital units, with ethereum, ripple and litecoin all losing about a quarter of their value Tuesday.
Bitcoin is down from record highs approaching $20,000 in the week before Christmas, having rocketed 25-fold over the year before being hit by concerns about a bubble and worries about crackdowns on trading it.
“It’s been a Cryptocalypse overnight with BTC (bitcoin) and other virtual currencies coming under heavy selling pressure,” said Greg McKenna, chief market strategist at AxiTrader.
But Shane Chanel, equities and derivatives adviser at ASR Wealth Advisers, sounded a slightly positive note, saying:
“Not all hope is lost. The cryptocurrency market is privy to these wild swings and seasoned veterans in this space have seen this happen many times previously.
“Not saying that it couldn’t be different this time but every major correction has been followed up by a rally more powerful than the last.”
David Cheetham, chief market analyst at XTB also warned against burying bitcoin prematurely.
“There have been numerous occasions when a sell-off in Bitcoin has prompted non-believers to rush in with declarations of the speculative bubble bursting, and each time they have been wrong,” he said.
But “crypto bulls” were still “in very real danger of getting badly burned with a substantial further decline ahead entirely feasible”, he added.
Hong Kong stocks soar
In Asia, Hong Kong stocks hit an all-time high to break a record that had been in place for more than 10 years.
However, most other regional markets fell into the red with energy firms rocked by lower oil prices.
Hong Kong’s Hang Seng Index spent most of the day in negative territory after ending at a record high close on Tuesday. But late buying saw shares stage a recovery to finish up 0.3% at 31,983.41 – overtaking its previous high seen on October 30, 2007.
However, most other markets in the region tracked Tuesday’s losses on Wall Street, where investors returned from a long holiday weekend to political horse-trading as Washington lawmakers struggle to avert a crippling government shutdown.
But on Wednesday the Dow was headed upwards again, pushing against the 26,000 level.
“US stocks are trading higher in early action, recovering from yesterday’s sharp downside reversal, with earnings results from Dow member Goldman Sachs and Bank of America fostering a mixed reaction,” the Charles Schwab brokerage said in a note to clients.
Key figures around 1435 GMT (10:35 pm, Manila time)
London – FTSE 100: DOWN 0.4 percent at 7,728.33 points
Frankfurt – DAX 30: DOWN 0.5 percent at 13,187.02
Paris – CAC 40: DOWN 0.2 percent at 5,500.43
EURO STOXX 50: DOWN 0.4 percent at 3,609.05
New York – DOW: UP 0.3 percent at 25,925.15
Tokyo – Nikkei 225: DOWN 0.4 percent at 23,868.34 (close)
Hong Kong – Hang Seng: UP 0.3 percent at 31,983.41 (close)
Shanghai – Composite: UP 0.2 percent at 3,444.67 (close)
Euro/dollar: DOWN at $1.2225 from $1.2259 at 2200 GMT
Pound/dollar: UP AT $1.3801 from $1.3794
Dollar/yen: UP at 110.68 yen from 110.53 yen
Oil – Brent North Sea: DOWN 9 cents at $69.06 per barrel
Oil – West Texas Intermediate: DOWN 3 cents at $63.70