Is it time to buy or sell European stocks? Bloomberg covers the news as European stocks decline three days in a row.
The Stoxx 600 lost 2.2 percent yesterday, closing down 4.8 percent from an almost seven-year high last month, amid a slump in energy shares and growing concern over Greece as Prime Minister Antonis Samaras said this month’s election could lead to the nation exiting the euro area. The Euro Stoxx 50 Index of the biggest companies in the region sank 3.7 percent, the most since November 2011. It fell another 0.4 percent today.
The threat of sliding back into recession hangs over Europeans markets as does the risk of Greece leaving the EU due to its seemingly eternal risk of debt default. In deciding whether or buy or sell European stocks one needs to anticipate the length of the current trend, if it is a mere correction or if in portends a long slide.
Slow Growth Hurts Stocks
The Street also follows as European stocks fall again.
A Purchasing Managers’ Index for euro-area services and manufacturing showed that the rate of expansion was at its weakest over the past year and a half.
The final December PMI reading was 51.4, up from 51.1 in November but well below the preliminary 51.7 figure published last month, Markit Economics said Tuesday. For the quarter as a whole, the average reading of 51.5 was the worst performance since the third quarter of 2013.
“Of greatest concerns are the ongoing downturns in France and Italy, alongside the stuttering performance seen in Germany,” said Chris Williamson, chief economist at Markit, in a statement. “Any signs of life,” he warned, “are in danger of being extinguished by malaise spreading from the region’s largest economies unless business and consumer confidence revives.”
The European Central Bank is beginning a quantitative easing program similar to the one that the US Federal Reserve used to pull the US economy out of the recession. The problem is that the Europeans, especially the Germans, are focused on austerity measures, and stimulus measures could well be too little and too late. If the Euro Zone sinks back into recession that will answer the question about whether or buy or sell European stocks.
Where Does the Company Do Business?
An example of a European stock that trades as an ADR in the USA is Siemens AG, the European General Electric. This company sells products and services across the globe and not just in the Euro Zone.
Siemens AG (Siemens) is a globally operating technology company with core activities in the fields of energy, healthcare, industry and infrastructure. Siemens business activities focus on four Sectors, Energy, Healthcare, Industry and Infrastructure & Cities.
The stock has fallen twenty points since last summer but is likely to stabilize and even rebound as pressure on the Euro drives it down and makes Siemens’ exports to the world more competitive. Do your fundamental analysis on individual European stocks before deciding whether to buy or sell.