Home Economy News European shares routed as recession worries heighten

European shares routed as recession worries heighten


European shares routed as recession worries heighten By Reuters

Breaking News


Economy 56 minutes ago (Sep 23, 2022 12:22PM ET)

(C) Reuters. The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, September 22, 2022. REUTERS/Staff

By Susan Mathew, Shreyashi Sanyal and Johann M Cherian

(Reuters) -European energy and material stocks sank nearly 6% on Friday, pushing a broader index of regional shares to near two-year lows as dismal euro zone data pointed to an economic downturn, adding to worries over hawkish central bank moves.

UK stocks lost 2%, with further losses capped by a 3% plunge in the pound after British finance minister Kwasi Kwarteng announced a series of tax cuts and measures aimed at boosting growth. [GBP/][.L]

The pan-European STOXX 600 index dropped 2.3%, taking weekly losses to 4.4% – its worst week since mid-June.

A survey showed the downturn in business activity across the euro zone deepened this month, likely entering a recession as consumers rein in spending amid a cost of living crisis.

Europe’s biggest economy, Germany, saw its main index hit its lowest since November 2020, down 2.0%.

“Given the downward risks and the high degree of uncertainty, everything is pushing towards a contraction in economic activity in the eurozone over the coming quarters,” said economists at ODDO BHF, adding that Germany may already be in recession as of the third quarter.

Europe is headed for a tough winter as doubts about energy supply paint a bleak outlook for pick-up in economic activity. Add to that the European Central Bank’s clear priority for inflation control, another 75 basis point hike in October is “definitely” on the table, said ING’s Senior Euro zone Economist Bert Colijn.

The STOXX 600 is down 20% for the year. It is also about 20% away from record highs hit in January.

Interest rates were sharply increased through the week, with the Fed delivering its third consecutive 75 basis-point hike and Switzerland exiting the era of negative interest rates on Thursday. The Bank of England raised rates by 50 bps.

As oil prices tumbled 5% on demand fears, BP (NYSE:BP), TotalEnergies and Shell (LON:RDSa) weighed the most on STOXX 600, down between 4.9% and 7%. The mining index logged its worst session in five months as metal prices dropped. [MET/L] [GOL/][O/R]

All major sectors were well in the red. Banks fell 3.6%, with Credit Suisse shedding 12.4% to hit a record low.

The Swiss bank sounded out investors for fresh cash, ources said, approaching them for the fourth time in roughly seven years as it attempts a radical overhaul of its investment bank.

Still, the banking index in Europe was set to sharply outperform the benchmark STOXX 600 in September on bets of the sector benefitting from a high-interest rate environment.

European shares routed as recession worries heighten

Market split on Colombia central bank’s next rate decisionBy Reuters – Sep 23, 2022

By Nelson Bocanegra BOGOTA (Reuters) – Analysts are split between those who expect Colombia’s central bank to moderately raise its benchmark interest rate next week and others who…

World Bank’s Malpass says no shareholders have asked him to resignBy Reuters – Sep 23, 2022

WASHINGTON (Reuters) – World Bank President David Malpass on Friday said none of the global development bank’s shareholders have asked him to resign in the wake of criticism…

Sri Lanka aims to have $2.9 billion IMF loan finalised in December – sourcesBy Reuters – Sep 23, 2022

By Jorgelina do Rosario and Uditha Jayasinghe LONDON (Reuters) – Sri Lanka expects the International Monetary Fund board to approve a $2.9 billion loan by year-end, officials from…

Our Apps

Terms And Conditions
Privacy Policy
Risk Warning

(C) 2007-2022 Fusion Media Limited. All Rights Reserved.

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

Related News