FRANKFURT -- Stocks bent
under the weight of Wall Street's
massive losses Monday, but did
not break.
Indices snapped back from
session lows as battered and bloody bulls looking
for bargains were encouraged by S&P 500
futures, which were up 27 points at 981, 21.50
points above fair value.
In Frankfurt, the Xetra Dax was up 28 points, or
0.6%, at 4839, up from the session low of 4647.
In Paris the CAC was down 4 points at 3647, up
from the low of 3516. London was closed Monday
for a holiday, and suffered larger losses today.
The FTSE was down 65 points, or 1.3%, at 5180.
Despite the bounce from session lows, the mood
in Europe was jittery, with many trembling fingers
poised on the sell button. At the first whiff today
that Wall Street will continue its downward slide,
many investors will sell and ask questions later.
In London, telecoms were hit hard. Vodaphone
(VOD:NYSE ADR) lost 7.7% and British
Telecom (BTY:NYSE ADR) fell 4.2%.
In Frankfurt, business software giant SAP
(SAP:NYSE ADR) was clobbered on the open on
spillover from the huge losses in the Nasdaq
before recovering. SAP was down 30 marks at
970, up from the day's low of 928. Siemens was
down 2.3% and Lufthansa was off 3.9%.
The battered German banks were in positive
territory, with Deutsche Bank up 1.1% and
Commerzbank up 2%.
At this morning session lows, the Dax was down
25.3% from July's high and the CAC was down
20.2%. Many market watchers insisted that this
decline has created value. They maintain that
rates are still low and fundamentals strong.
Tim Wilson, equities trader at Banque
Nationale de Paris in Frankfurt, said he
remained cautious, but added: "I think it is time to
start buying."
Others, though, were not so sure. The sharp
declines in Europe the past few months have
created a couple of vicious bull traps that hav e
left buy-the-dip investors aching. The great fear is
that despite the massive hemorrhaging of
European markets, a few more tons of blood can
still be squeezed out before a firm bottom is
formed.
But some contrarians and bruised bulls here think
that a lot of short positions on Wall Street -- some
freshly minted Monday -- were left uncovered at
yesterday's close. They are hoping that signs of a
rebound today could fuel a merciless short
squeeze, forcing the new bears to cough up
higher prices as they retreat.
Roland Lienau, head of equities at Paribas in
Frankfurt, agreed that European markets, as well
as Wall Street, might stage a technical bounce.
But he thinks it will be short-lived and thinks
indices have not yet hit bottom. He warned that
market-timers trying to profit from a technical
bounce do so at extreme risk in such an
emotional, volatile market.
"It is extremely difficult to time a technical
bounce," he said.
But Lienau did concede that some sectors were
starting to look enticing. He mentioned
pharmaceuticals and telecoms. And the bravest
investors might want to start looking at the
hard-hit German banks. "Most of the damage has
already been done," he said.
He said, though, that he would not become a big
buyer until Russia's political crisis is resolved,
even if that means Boris Yeltsin's power is
diminished: "The worst thing for markets is
uncertainty and we have too much of that at the
moment."
In Asia, most stock markets fell, although perhaps
not as far as some might have expected. The
Nikkei, down more than 3% early, was able to
bounce back for a 1.9% gain.
The yen gained again overnight, and was last bid
at 137.77 to the dollar. Meanwhile, the dollar was
little changed at 1.7490 marks. U.S. long bond
prices dipped overnight, with the yield rising to
5.32%. |
