Connect with us


European stocks skid on gloomy business activity data, commodity weakness

European stocks skid on gloomy business activity data, commodity weakness 1

By Sruthi Shankar

(Reuters) – European shares dropped on Thursday after a survey showed euro zone business activity slowed significantly in June, adding to fears of a sharp economic downturn, while sliding oil and metal prices hit commodity-linked stocks.

The continent-wide STOXX 600 index dropped 1%, with miners shedding 2.6% to hit an over six-month low as copper and other metals extended recent declines on growing fears about a recession. [MET/L]

Economically sensitive sectors including banks and automakers fell nearly 2%, while oil & gas stocks slipped 1.0%. [O/R]

An S&P Global survey showed euro zone business growth slowed significantly this month, and by much more than expected, as consumers concerned about soaring bills opted to stay at home and defer purchases to save money.

“European assets will remain under stress until inflation recedes, and global growth momentum reaccelerates,” BCA Research analysts wrote in a note.

“While the ECB has ratcheted up its hawkish rhetoric and will do whatever it takes to overcome inflationary pressures, this will be a headwind to an already brittle economy.”

The European Central Bank (ECB) will likely raise its deposit rate above zero for the first time in a decade in September, according to most economists polled by Reuters.

Adding to the downbeat mood, Federal Reserve Chair Jerome Powell said on Wednesday the U.S. central bank is not trying to engineer a recession to stop inflation but it is fully committed to bringing prices under control even if doing so risks an economic downturn.

Norway’s central bank raised its benchmark interest rate by 50 basis points on Thursday, its largest single hike since 2002.

The benchmark STOXX 600 has shed nearly 19% since hitting a record closing high on Jan. 5, with the session’s losses putting it close to confirming a bear market, or 20%, decline from a recent peak.

Germany’s DAX, France CAC 40 and Italy’s FTSE MIB are all in a bear market.

German real estate group Aroundtown tanked 9.1% after J.P. Morgan downgraded the stock to “underweight”, while telecoms towers group Vantage Towers dropped 4.6% after Morgan Stanley cut its rating to “equal-weight”.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Rashmi Aich)

Editorial & Advertiser disclosure
Our website provides you with information, news, press releases, Opinion and advertorials on various financial products and services. This is not to be considered as financial advice and should be considered only for information purposes. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third party websites, affiliate sales networks, and may link to our advertising partners websites. Though we are tied up with various advertising and affiliate networks, this does not affect our analysis or opinion. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you, or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish sponsored articles or links, you may consider all articles or links hosted on our site as a partner endorsed link.
Global Banking and Finance Review Awards Nominations 2022
2022 Awards now open. Click Here to Nominate


Newsletters with Secrets & Analysis. Subscribe Now