European stocks hit near six-month low on US recession fears
European shares tumbled to a near sixmonth low at the start of the week amid a global sell-off in equities on fears of a slowdown in U.S. economic growth.
The pan-European STOXX 600 index was down 3.1% to 482.42 points by 0711 GMT, hitting its lowest since Feb. 13. The benchmark is also set for its worst day in 2-1/2 years.
The index saw its worst week in nearly 10 months on Friday and fell below the 500-mark for the first time since April 15.
Fears that the U.S. could be heading towards a recession have sent investors dashing away from risk assets. All major European bourses opened in the red.
European shares tumble as global equity rout amplifies
Financial sectors were hit the most on the day. Banks lost 4.2%, financials services shed 3.6% while and the tech sector slipped 5%.
Among individual stocks, Galderma gained 2.2% after L’Oreal said it would acquire a 10% stake in the Swiss skincare firm from a group of major shareholders.
OCI Global jumped 7.3% after Woodside Energy said it would acquire the Dutch chemicals maker’s clean ammonia project in Texas for $2.35 billion.
Earlier, Europe’s main stock markets sank at the open on Friday after sharp losses elsewhere, as fears grew over a possible recession in the United States.
London’s benchmark FTSE 100 index lost 0.7 percent to 8,228.98 points.
In the eurozone, the Paris CAC 40 slid almost 1.0 percent to 7,299.35 points and Frankfurt’s DAX shed 1.6 percent to 17,800.93.
Tokyo led losses across Asia due to a stronger yen and expectations for more Japanese rate hikes, while disappointing data sparked a plunge on Wall Street and fuelled fresh fears of a US recession.
“Sentiment turned on its head as recessionary fears surfaced, following a slew of corporate and economic data which brought into question whether the Federal Reserve is now behind the curve,” remarked Richard Hunter, head of markets at Interactive Investor.
“Even though Fed Chair Powell signalled earlier in the week that a rate cut was likely in September, the concern is now that the Fed may have missed the boat and that the idyllic economic soft landing will not be achieved.”
Meanwhile, The pan-European STOXX 600 index closed 0.8% higher after hitting a more than two-month low in the previous session, logging a marginal weekly advance of about 0.5%.
EssilorLuxottica jumped 7.4% after the Ray-Ban maker’s CEO said Meta had told him it might take a stake in the company, while Hermes rose 3.4% after slightly beating second-quarter sales expectations. A gauge of 10 of Europe’s biggest luxury names advanced 2.9%, logging its biggest single-day jump in six months.
Construction and materials led gains amongst the major STOXX sectors, adding 1.7%, with France’s Vinci up 3.5% after the highway operator posted first-half revenue growth and margin expansion.
Meanwhile global markets remained sanguine after data showed US prices rose moderately in June, underscoring an improving inflation environment that potentially positions the Federal Reserve to begin cutting interest rates in September.
“Today’s PCE number gives more evidence that we’re on the downward slope in terms of inflation,” said David Russell, global head of market strategy at TradeStation. Following the data, expectations rose that the Fed might use its meeting next week to signal that it could start cutting interest rates in September.
Europe’s benchmark index ended the week mostly subdued as a barrage of downbeat earnings including luxury heavyweight LVMH , carmaker Stellantis and Nestle earlier in the week offset rebounding tech shares.
Autos was the worst performing sector this week, while health care was the best with a 2.2% weekly gain. Among other headlining stocks, French IT consulting group Capgemini lost 2.5%, forecasting a surprise fall in annual revenue.
Hexagon shed 3.3% after the Swedish industrial technology group reported secondquarter results below expectations and said the slowdown in construction and automotive markets would continue to weigh on the trading environment in the third quarter.