European Stocks Experience Decline

European stocks have gone down from the highest level in last 5 years as the bank and airline shares retreated on today, thereby overshadowing great retail sales data in US that surpassed forecasts. The benchmark stock gauge Stoxx Europe 600 Index went down by 0.2% and it is currently at 304.35. The gauge has therefore snapped gains of last 4 days. On last week, the gauge was able to record a gain of 1.3% as different companies such as BT Group Plc.; Hochtief AG etc. posted earnings reports which were better than forecasts. Apart from that, the President of European Central Bank, Mario Draghi said that the policy makers are now ready to cut the interest rates if they feel that there is any requirement. Incidentally, the Stoxx Europe 600 Index has jumped up by 8.8% in this year.

According to the Senior Strategist of PFA Pension A/S, Witold Bahrke, the US economy may still hit a soft patch in the 2nd quarter of this year. However, the retail sales data confirms that the underlying recovery is robust in nature. Bahrke added that if the US economy turns out to be strong, that could put the sweet spot of decent growth and ultimately loose the financial conditions at risk.

According to the figures released by the Commerce Department, the retail sales in US went ahead by 0.1% in April after experiencing a decline of 0.5% in last March. Incidentally, the economists predicted that the retail sales will experience a decline of 0.3%.

On 15th May, a report came out showing that the Euro region is currently suffering from the longest stretch of recession since the introduction of the single currency – Euro. The 17-nation economy may see its Gross Domestic Product to decline by 0.1% in the 1st quarter of 2013, as predicted by the economists. If that happens, it will mark the 6th straight quarterly decline, exceeding the 15-month long contraction that took place in 2008-2009.

On the other hand, Commerzbank saw its shares sinking the most in the last 2 months as Handelsbhatt reported that the lender is going to sell some new shares on this week. Apart from that, Standard Chartered Plc. saw its shares dropping to a figure that’s the lowest in last 4 months. Muddy Waters LLC stated that it will bet against debt of Standard Chartered, thereby causing the decline.