NEW YORK: European equity markets were pressured Tuesday as the International Monetary Fund cut its growth forecasts after Britain’s EU exit, which also appeared to be casting a shadow over Germany’s outlook.
Declines in Paris and Frankfurt came as the Dow climbed to a fresh record in the US and the dollar strengthened on the comparatively benign outlook of the American economy.
“The outperformance of the US economy, safety of US assets and steady monetary policy makes American investments attractive and keeps the dollar in demand,” said Kathy Lien of BK Asset Management.
The IMF trimmed its forecasts for growth to 3.1 percent this year and 3.4 percent in 2017, both down 0.1 percent from the prior estimates.
The IMF also downgraded its 2016 growth forecast for the British economy by 0.2 percentage points to 1.7 percent.
Nevertheless, London’s benchmark FTSE 100 index appeared to shrug off the gloomy prediction, closing almost flat.
A leading survey showed Tuesday that investor confidence in Germany fell to its lowest level in nearly four years in July on concerns about the Brexit fallout.
Focus in the US was dominated by earnings announcements from big companies, with most companies meeting or exceeding expectations.