On Monday, the main European stocks index hit its lowest in over six months as slowdown fears in the world’s largest economy knocked equities globally, with energy and utility stocks at the forefront of a broad-based market slide.
The STOXX 600 closed 2.2% lower but off the day’s low. The continent-wide index logged its steepest three-day decline since June 2022, closing below the key 500-point mark for a second day.
The “fear gauge” Euro STOXX volatility index hit its highest level since March 2022, reflecting a sharp rise in investor anxiety.
Risk-off sentiment prevailed on fears that the United States could tip into recession, sharply hitting Wall Street and equity markets elsewhere, and steering hopes of interest rate cuts to stimulate economic growth.
However, news of a rebound in the U.S. services sector in July offered some relief to investors, helping U.S. and European stocks pare some of the day’s losses.
Among major European bourses, Germany’s DAX, France’s CAC 40, Britain’s FTSE, and Spain’s IBEX 35 fell between 1.4%-2.3%, hitting multi-month lows intraday.
“Traders were already concerned over the global demand growth outlook,” said David Morrison, senior market analyst at Trade Nation. “Add this (higher likelihood of U.S. slowdown), with the economic uncertainty over China and Europe, can only suggest weaker demand for oil and other energy products going forward.”
Economic concerns back home were also underscored by eurozone business activity growth stalling last month.
Traders now see a 78% chance of a 50-basis-point Federal Reserve rate cut in September, while bets of a second cut by the European Central Bank stand at 88%, according to LSEG data.
In a bruising session for all the European sectors, energy hit a six-month low, tracking lower oil prices, while utilities touched an over one-month low. Banks also tumbled to a four-month low on U.S. recession fears.
Meanwhile, technology and chemicals were some of the least hit sectors, although down around 1% each.
Among single movers, Europe’s largest copper producer Aurubis slumped 12% after a third-quarter pre-tax profit miss.
On the flip side, Infineon rose 1.3% following job cut plans, while OCI jumped 13% on plans to sell its Clean Ammonia project in Texas to Woodside Energy for $2.35 billion.
Galderma rose 1.3% after L’Oreal said it would acquire a 10% stake in the Swiss skincare firm.
(Source: Reuters)
Mary Lee is a freelance writer and journalist based in Toronto, Canada. She holds an M.S. degree in business and economic journalism from Columbia University’s Graduate School of Journalism in New York and a certificate in digital marketing from the University of Toronto.
