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Pessimism in European stock markets in light of energy prices and the threat of recession

Pessimism in European stock markets in light of energy prices and the threat of recession

Pessimism in European stock markets in light of energy prices and the threat of recession

The IS EURO STOXX 50 it opens the session on Friday with a decrease of 0.72% at 3,750 points, and the German DAX fall 0.80% and marks 13,586 points. In Paris the CAC 40 it yields 0.59%, while in London the FTSE 100 is slightly better but falls 0.28%.

Fears of recession begin to rise in Europe after that Yesterday, Thursday, natural gas prices reached new all-time highs, adding to inflationary pressures just when it has just been confirmed that inflation in the eurozone reached a record high of 8.9% in July.

Just this morning, investors learned that Germany’s producer price index rose 5.3% in June, when a Reuters survey of analysts had predicted the figure would rise 0.6% in July. In year-on-year terms, the figure rose 37.2%, compared to the 32% the market was expecting.

Inflationary pressures suggest that the European Central Bank (ECB) will have to add another half-point rate hike to the increase in July in September, increasing the risk of a recession. On Wednesday, economic growth in the eurozone in the second quarter was revised down, from 0.7% quarterly to 0.6%.

It’s not all bad news from a macroeconomic perspective as UK retail sales rose by 0.3% in July, but this still represents a 3.4% year-on-year decline. In addition, UK consumer confidence declined, as record inflation levels caused the GfK consumer confidence index to fall to -44 in August, from July’s reading of -41, which was the already the lowest level since the survey began.

In addition to this negative sentiment in the market there is the news that German Chancellor Olaf Scholz will testify this Friday about his role as mayor of Hamburg in the fight against a billion-euro tax fraud.in a situation that threatens to destroy his figure shortly after he became the political leader of the country.

It is the bleak economic outlook that hangs over Europe the euro fell 1.7% so far this week, to 1.0070 dollars. The dollar also rose 2.0% against the yen this week, reaching 136.38 yen, the highest level since late July. Against a basket of currencies, the greenback was up 1.9% on the week at 107.66.

Across the Atlantic, Federal Reserve policymakers came out Thursday to express their view that further increases in interest rates are needed to control inflation. After the uncertainty left by the minutes of the last meeting of the Fed, all eyes are now focusing on the Jackson Hole symposium next week to find out which direction the institution will take.

Asian stocks and Wall Street

Additional concerns about the health of China’s economy sent the broader MSCI index of Asia-Pacific stocks, which excludes Japan, down 0.1%, down 1% from a week earlier. The encouraging outlook for Chinese equities remained almost unchanged, while South Korea’s Kospi lost 0.4%. The Japanese Nikkei was stable, helping further decline in the yen.

On Wall Street, S&P 500 futures were down 0.2% and little changed for the week, after repeatedly failing to break above the 200-day moving average, while Nasdaq futures were down 0.2%.

Oil heads for a week of losses

Oil prices fell early Friday morning and are headed for a weekly loss, despite a two-day midweek rally, as worries about a global slowdown continue to dampen demand for crude oil.

Data released on Wednesday showing US crude inventories fell sharply last week helped reassure traders that demand was holding up despite high price levels, but the market turned negative for fear of continued recession and increased output from Iran.

Los oil futures Benchmark European Brent crude fell 0.6% to $95.97 a barrel, while US West Texas Intermediate fell 0.7% to $89.80. Both benchmark contracts are headed by weekly losses of over 2%..

Also, gold futures fell 0.2% to $1,768.45 an ounce.

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