Stocks markets around the world were lackluster Tuesday despite the US tech index NASDAQ reaching a symbolic milestone, as investors awaited the release of a China economic-growth target for 2015.
The MSCI’s 46-country world index was down 0.5 percent, to 432.02. France’s CAC 40 shed a percent to settle at 4,915.77, as was Germany’s DAX, which lost 1.1 percent to 11,408.47. The U.K.’s FTSE 100 dropped to 6,933.63.
Wall Street pulled back from recent highs as investors weighed soft auto sales, international headlines and looked ahead to domestic data. Health-care and technology companies reported big losses. U.S. stocks were unable to sustain Monday’s record closes, which had the Nasdaq above 5,000 for the first time since the dot-com era 15 years ago and the S&P 500 and Dow at new highs.
Economic reports due to release this week is expected to provide hints on when the Federal Reserve may increase its benchmark interest rate. Investors also looked ahead to details of the European Central Bank’s debt buying plan on Thursday.
“The biggest thing is we’re at the record highs and a lot of people, at the margin, are taking profits,” Jim Paulsen, the Minneapolis-based chief investment strategist at Wells Capital Management, which oversees $338 billion, said by phone on Tuesday. “The sectors getting hit today are the big momentum sectors: consumer cyclicals, health care and technology.”
Investors are looking for signs that the economic situation across the globe is improving before adding to equity holdings, analysts said.
The market turned less optimistic about the prospects of the United States as poor winter weather hurt vehicle sales again.
“The air gets a little thin up at new highs and you need a driver to keep it going, and one of the things we are not getting as a driver today is solid auto sales,” said Art Hogan, chief market strategist at Wunderlich Securities in New York.
“There’s no economic reports other than auto and truck sales so I don’t think there’s anything going on except that the market is rolling over,” said Robert Pavlik, chief market strategist at Boston Private Wealth. “I don’t think today’s market (was) the start of any sort of consolidation.”
A better-than-projected 2.9 percent growth in German retail sales in the first month of this year sent European equities near seven-year highs. The pan-European FTSEurofirst 300 index reported a fall of 0.98 percent to settle at 1,545.35, below Monday’s seven-year high.
Statistics Canada said in its report released Tuesday that the country’s economy GDP rose at a faster-than-expected clip in late 2014 and the Swiss economy showed slower-than-projected growth decline. The Toronto Stock Exchange’s S&P/TSX composite index was down 130.20 points or 0.85 percent to end Tuesday’s trade at 15,133.85.
The benchmark S&P ASX 200 edged down 0.4% to 5933.90, led by bank stocks after the central bank announced no change to its benchmark interest rate at 2.25%.
Moving toward Asia, investors shifted their focus on the annual meeting of China’s legislature, which begins Thursday, for Beijing’s latest economic plans. The country is likely to declare a growth target for this year which in last year was 7.5 percent. China actually achieved a growth of 7.4 percent, representing the worst in 24 years. The market foresees the target will be reduced to 7 percent in 2015 as China is in the process of a multiyear shift in its economy away from industrial led growth to pay more attention on consumers and services.
The Shanghai Composite dropped 2.2% to reach at 3263.05, its worst intraday fall in a month, while Hong Kong’s Hang Seng Index edged down 0.7% to settle at 24702.78, after an unexpected rate cut by China over the weekend was not able to uphold market gains.
Tokyo’s Nikkei Stock Average dipped 0.06 percent due to profit taking after the index marked 15-year highs on Monday.
