World markets sluggish in spite of upbeat US, EU data
AP and AFPPARIS/HONG KONG--World stock markets struggled to find direction Wednesday despite mostly encouraging economic data from the U.S. and eurozone.
January 9, 2014, 12:00 am TWN
Eurostat, the EU's statistics office, said retail sales in the eurozone jumped 1.4 percent in November, far more than expected, while the unemployment rate held steady at 12.1 percent for the eighth month running.
Although the figures suggest the eurozone recovery might pick up, the bloc still faces big problems — the unemployment rate is at a record high and there are huge disparities across the region.
By late morning in Europe, France's CAC-40 was down 0.3 percent 4,251, while the DAX in Germany dropped 0.2 percent 9,491. Britain's FTSE index fell 0.3 percent to 6,736.
“While signs of stabilizing labor markets is relatively encouraging, unemployment remains worryingly high across the eurozone and it seems unlikely to come down markedly any time soon,” said Howard Archer, chief European economist at IHS Global Insight. “Economic activity will likely remain too limited in the near term at least to generate many jobs.”
After a tentative start to 2014 — caused by profit-taking following healthy gains last year — U.S. shares enjoyed a rally on Tuesday after the Commerce Department said the trade deficit shrank in November as exports hit a record high for a second straight month.
The deficit narrowed 12.9 percent from October, the second month in a row of contraction, to US$34.3 billion, the smallest figure since September 2009.
The upbeat numbers added to growing optimism about the world's number one economy and could tilt the Fed to consider further reducing its stimulus program.
The central bank said at its last meeting that from January it would cut its bond-buying by US$10 billion a month to US$75 billion. Minutes for that gathering are due for release later Wednesday and could give clues about its future intentions.
The data “further supports the view that the outlook for the U.S. economy is improving,” St. George Bank economist Janu Chan told Dow Jones Newswires.
Later Wednesday, payroll processor ADP issues its report on U.S. job growth among private companies for December. That will give investors more information about how the American economy is faring.