U.S. Investors Find No Refuge in Europe
American investors in European stocks are finding no safe haven this year from Wall Street’s woes.
European stocks tumbled Thursday, sending benchmark indexes to 52-week lows in Germany, Britain, France, Italy, Spain, Switzerland, the Netherlands and Sweden.
Most key indexes fell 4% or more. Britain’s FT-SE 100-share index posted its worst one-day loss in 13 years, losing 4.1%.
Europe’s losses accelerated as Wall Street opened the day lower. Europe’s trading sessions are ending as Wall Street begins trading.
Last year, European markets held up relatively well despite the carnage in U.S. technology stocks. The problem for U.S. investors mainly was the dollar’s strength against the euro, which depressed European market returns for Americans.
But this year, fears have mounted that the U.S. economy’s slowdown is infecting Europe. That has hammered European stocks, especially in recent weeks.
The French government Thursday cut its forecast for 2001 economic growth to 2.9% from as much as 3.6%, citing a slowdown in exports.
European Central Bank President Wim Duisenberg suggested that European growth may be affected by worse-than-expected weakness in the U.S. economy.
Corporate profit concern “has spread to the entire [European] economy, and the market is expecting the next earnings and economic figures to be even worse than the last,” said Juergen Wetzel, money manager at Investment GmbH in Berlin. “The market is in the middle of a panic.”
The slowdown in U.S. growth “may be more significant than previously anticipated” and could “have implications for world economic growth and thus for the euro zone,” Duisenberg said in a speech.
“Even the ECB is waking up to the fact that there’s a significantly weaker European growth story now,” said Philip Isherwood, equity strategist at Dresdner Kleinwort Wasserstein in London. “We’ve got panic in the markets and low valuations, but you don’t have earnings realism from analysts.”
Germany’s DAX stock index is down 16.3% year to date. As the dollar has continued to rise against the euro that has deepened European market losses for Americans invested there. In dollar terms, the German market is down 21.2% this year.
The French market is down 18.6% in euro terms this year and down 23.4% in dollar terms.
By contrast, the U.S. Standard & Poor’s 500-stock index is down 15.4% this year.
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Euro’s Value Fades Further
The euro currency rallied late last year against the dollar, but in recent weeks its value has slumped anew.
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Monthly closes and latest for the euro currency’s value in U.S. dollars
Thursday: 88.8 cents
Source: Bloomberg News
