European Markets Dropped On Greek Concerns & U.S. Weakness

(RTTNews) - The majority of the European markets pulled back from 7-year highs on Tuesday. Investor sentiment was impacted by concerns over Greece and the weak performance of the U.S. markets. The weakness in the U.S. was caused by the unexpected drop in durable goods orders and some disappointing corporate earnings reports. Results from companies like Caterpillar and Microsoft were negatively impacts by the strong U.S. dollar.

Now that the anti-austerity Syriza party has taken control of Greece, following Sunday's election, investors are concerned over the potential outcome of debt re-negotiations. A Greek exit of the eurozone also remains a very real possibility.

The eurogroup is ready to work with the new Greek government, however, there is very little support for a write-down of debt, Jeroen Dijsselbloem, head of the eurogroup said late Monday.

Pointing out that a number of concessions have already been made to Greece, Dijsselbloem said, "Working within the Eurozone means they will comply with all the rules and agreements that we have within the Eurozone, and on that basis, we will support them where we can."

He added that if Greece commits to the rules and agreements, partial renegotiation might be considered, but also added that it's too early to say.

U.K. economic growth slowed more than expected in the fourth quarter due to weakness in the production and construction sectors but the economy logged its strongest growth in seven years in 2014 as a whole, preliminary data from the Office for National Statistics showed Tuesday.

Gross domestic product grew 0.5 percent sequentially, slower than the 0.7 percent expansion seen in the third quarter and a 0.6 percent rise forecast by economists. This was the slowest growth in a year but marked the eighth straight quarter of expansion.

U.K. mortgage approvals decreased more than expected in December, data from British Bankers' Association, or BBA, revealed Tuesday. The number of loans approved for house purchases fell to 35,667 in December from 36,657 in November. It was forecast to fall to 36,500.

The Euro Stoxx 50 index of eurozone bluechip stocks decreased 1.23 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.70 percent.

The DAX of Germany declined 1.57 percent and the CAC 40 of France fell by 1.09 percent. The FTSE 100 of the U.K. dropped by 0.60 percent, but the SMI of Switzerland finished higher by 1.28 percent.

In Frankfurt, Siemens dropped by 3.08 percent. The industrial conglomerate confirmed its full-year outlook despite posting lower profit for the first quarter.

Commerzbank declined by 2.21 percent and Deutsche Bank lost 3.39 percent.

Daimler decreased by 2.78 percent and BMW fell by 3.04 percent. Volkswagen also finished down by 1.75 percent.

In Paris, Societe General declined by 2.30 percent. Credit Agricole fell by 1.48 percent and BNP Paribas dropped by 0.98 percent.

In London, EasyJet increased by 1.88 percent. The company announced that it now expects its loss for the first half of the year to be between 10 million pounds and 30 million pounds, compared to 53 million pounds last year.

International Consolidated Airlines Group rose by 2.19 percent, on reports that the board of Aer Lingus Group will recommend IAG's takeover offer.

Royal Bank of Scotland finished lower by 1.77 percent and Lloyds Banking lost 1.14 percent.

Swiss pharmaceutical giant Novartis rose by 2.13 percent in Zurich. The company posted lower profit in its fourth quarter, mainly reflecting the impact of its divestments as it aims to focus on core businesses of innovative pharmaceuticals, eye care, and generics.

Philips tumbled by 6.29 percent in Amsterdam, after the electronics group reported a 67 percent slump in annual net profit.

Ericsson dropped by 3.98 percent in Stockholm, after the mobile network equipment maker reported lower profit in its fourth quarter despite a slight increase in net sales.

New orders for U.S. manufactured durable goods unexpectedly showed a substantial decrease in the month of December, according to a report released by the Commerce Department Tuesday morning. The drop was partly due to a sharp decline in orders for transportation equipment.

The report said durable goods orders tumbled by 3.4 percent in December following a revised 2.1 percent decrease in November. Economists had expected durable goods orders to increase by 0.5 percent compared to the 0.7 percent drop originally reported for the previous month.

After reporting an unexpected drop in sales of new single-family houses in the previous month, the Commerce Department released a report on Tuesday showing that U.S. new home sales rebounded by more than anticipated in the month of December.

The Commerce Department said new home sales jumped 11.6 percent to an annual rate of 481,000 in December from the revised November rate of 431,000. Economists had expected new home sales to climb to a rate of 452,000 from the 438,000 originally reported for the previous month.

Annual home price growth in major metropolitan areas continued to slow in the month of November, according to a report released by Standard & Poor's on Tuesday.

The report said the annual rate of growth by the S&P/Case-Shiller 20-City Composite Home Price Index slowed to 4.3 percent in November from 4.5 percent in October. The slowdown matched economist estimates.

Consumer confidence in the U.S. has seen a substantial improvement in the month of January, according to a report released by the Conference Board on Tuesday, with the consumer confidence index jumping to its highest level in over seven years.

The Conference Board said its consumer confidence index surged up to 102.9 in January from an upwardly revised 93.1 in December. Economists had expected the index to climb to 96.0 from the 92.6 originally reported for the previous month.

The Federal Reserve has begun its 2-day meeting today and the central bank will make an announcement upon the meeting's conclusion on Wednesday.