Europe: Stoxx 600 hits six-month low in global rout on US recession fears
THE main European stocks index hit its lowest in over six months on Monday as fears of a slowdown 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 per cent 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 US services sector in July offered some relief to investors, helping US 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 to 2.3 per cent, hitting multi-month lows intraday.
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“Traders were already concerned over the global demand growth outlook,” said David Morrison, senior market analyst at Trade Nation. “Add this (higher likelihood of US 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 euro zone business activity growth stalling last month.
Traders now see a 78 per cent 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 per cent, 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 US recession fears.
Meanwhile, technology and chemicals were some of the least hit sectors, although down around 1 per cent each.
Among single movers, Europe’s largest copper producer Aurubis slumped 12 per cent after a third-quarter pre-tax profit miss.
On the flip side, Infineon rose 1.3 per cent following job cut plans, while OCI jumped 13 per cent on plans to sell its Clean Ammonia project in Texas to Woodside Energy for US$2.35 billion.
Galderma rose 1.3 per cent after L’Oreal said it would acquire a 10 per cent stake in the Swiss skincare firm. REUTERS
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