By Clare Connaghan and Neelabh Chaturvedi
Europe got swept up in the global stock-market rout Friday, with
the major indexes suffering losses, mirroring the sharp declines
seen in Asia and Wall Street overnight.
The benchmark Stoxx Europe 600 index fell 1.4%, while Germany's
DAX index shed 1.5%. The U.K. FTSE 100 index was 1.2% lower, while
France's CAC 40 dropped 1.1%. This followed declines in Asia, where
Japan's Nikkei index ended 2.4% lower--its sharpest percentage loss
since March 14.
A sharp selloff in U.S. equity markets Thursday triggered the
retreat from global stock markets Friday, and Wall Street continued
to edge lower Friday, with the Dow Jones Industrial Average off
0.3%, the S&P 500 down 0.2% and the Nasdaq off 0.1%
"The reversal of momentum in U.S. equities...has wrapped itself
around almost everything else like a cyclone," said Robert Savage,
chief executive of Track.com.
The Nasdaq Composite Index notched its biggest one-day
percentage slide in nearly 2 1/2 years Thursday, as investors
resumed selling biotechnology and technology shares on concerns
these once-highflying stocks are overvalued.
The tech-heavy Nasdaq Composite Index ended down 3.1%. The Dow
Jones Industrial Average was also hit by selling, dropping 266.96
points and ending down 1.6%, at 16,170.22--its worst point and
percentage decline since February.
"As it becomes ever clearer that the Federal Reserve is pretty
much fixed in its determination to stop quantitative easing late
this year, the oxygen that has fueled the five-year bull market is
slowly draining out of the market," said Deutsche Bank strategists
Jim Reid and Anthony Ip.
Sectors that benefited the most from the easy policy, such as
technology and biotech, are the ones that are now suffering, the
Deutsche Bank strategists added.
"There is no immediate signs that we are going to bounce back
soon; markets are still quite some way from being oversold," said
Guy Foster, head of portfolio strategy at Brewin Dolphin, which
manages GBP26 billion ($43.6 billion) in assets.
"As we enter earnings season, there is plenty of potential
catalysts for either further good or bad news," said Mr.
Foster.
Earlier Friday, J.P. Morgan Chase reported disappointing
first-quarter earnings, while Wells Fargo posted a rise in
first-quarter net income even as the banking giant's revenue
dropped from the year-earlier quarter.
Also on the agenda, the International Monetary Fund spring
meetings kick off in Washington later.
Elsewhere, Fitch Ratings on Friday raised its outlook for
Portugal to "positive" from "negative," citing the bailed-out
euro-zone nation's strong economic recovery and falling budget
deficit.
The move had little market impact, with the yield on Portugal's
10-year benchmark bond climbing 0.08 percentage point to 3.94%.
Greek bonds, meanwhile, fell a day after the country's first sale
of longer-term debt in four years. The yield on the benchmark
10-year Greek bond rose 0.34 percentage point to 6.206%.
In the currency market, the pound slumped 0.3% against the
dollar, after data showed construction output fell 2.8% in February
from January.
China was also in the spotlight after inflation came in just
below expectations for March, suggesting domestic demand remains
soft as the economy loses momentum. In addition, Premier Li Keqiang
offered the strongest and most public signal yet that the country
is bracing for a new low in growth. The comments that growth could
be a bit higher or lower than the 7.5% target add to investors'
concerns about the world's No. 2 economy after trade officials
reported a surprise drop in exports on Thursday.
In commodities markets, gold fell 0.2% at $1,317.50 an ounce,
and Brent crude oil was 0.2% higher at $107.74 a barrel.
In emerging markets, the Turkish lira was down around 0.7%
against the buck Friday after ratings firm Moody's Investors
Service cut its outlook on Turkey's Baa 3 government bond rating to
negative from stable.
Write to Clare Connaghan at clare.connaghan@wsj.com and Neelabh
Chaturvedi at neelabh.chaturvedi@wsj.com
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