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European Stocks Sharply Lower; U.K. GDP Slumps in April



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By Peter Nurse – European stock markets traded lower Monday, with weak UK growth data raising fears of an economic slowdown in the region just as central banks move to address red-hot inflation.

By 3:50 AM ET (0750 GMT), the DAX in Germany traded 1.4% lower, the CAC 40 in France fell 1.5%, and the UK’s FTSE 100 dropped 0.9%.

Data released earlier Monday showed that the UK economy contracted in April, with gross domestic product falling by 0.3% as the manufacturing, services, and construction sectors all declined simultaneously for the first time since January 2021.

This slowdown in growth comes ahead of Thursday’s Bank of England policy-setting meeting at which the central bank is widely expected to deliver what will be its fifth consecutive 25 bps rate hike since December after UK inflation hit a four-year high of 9% in April.

Europe had already received a weak handover from Asia, with Japan’s Nikkei, South Korea’s KOSPI and the Hang Seng in Hong Kong all falling around 3%, as investors digested the largest year-on-year increase in the US consumer price index since December 1981, data showed on Friday.

This hit hopes that US inflation had peaked and raised the chances that the Federal Reserve, which meets later in the week, will continue its aggressive monetary tightening past the 50 basis point hikes already largely priced in for June and July.

This follows the European Central Bank confirming late last week that it intends to hike interest rates by 25 basis points in July, with another rate increase also expected in September.

Adding to the market’s woes was Sunday’s news of a “ferocious” COVID-19 outbreak in Beijing’s most populous district of Chaoyang.

In corporate news, Sanofi (NASDAQ:SNY) stock fell 0.8% despite the French drugmaker saying the COVID-19 vaccine candidate it has developed jointly with GSK (LON:GSK) in two trials showed a potential to protect against the virus’s main variants of concern when used as a booster jab.

Oil prices slipped Monday as a burst of new COVID-19 cases in Beijing, China’s capital city, thwarted hopes of a rapid increase in demand from the world’s largest crude importer.

Also weighing on the price of crude is the prospect of further US monetary tightening to combat surging inflation, boosting the dollar and potentially causing a sharp economic slowdown.

By 3:50 AM ET, US crude futures traded 1.8% lower at $118.56 a barrel, while the Brent contract fell 1.7% to $119.95.

Additionally, gold futures fell 0.8% to $1,859.95/oz, while EUR/USD traded 0.5% lower at 1.0463.

Stock Markets

U.S. stock market indices are down 1-2%



U.S. stock market indices

U.S. stock market indices declined yesterday on growing fears of a recession in the U.S. economy, with the S&P 500 index falling for the fourth consecutive time.

U.S. stock indices list – what’s happening right now?

Inflation will drain Americans’ financial reserves and could lead to a recession sometime in the middle of next year, according to the head of JPMorgan Chase & Co (NYSE:JPM). Jamie Dimon. His Goldman Sachs Group (NYSE:GS) colleague David Solomon also expects a recession in the coming months, and he believes markets are in for a turbulent period. The situation also affected T-Bond Futures.

Meanwhile, the U.S. Commerce Department said Tuesday that the country’s trade deficit widened 5.5 percent to $78.2 billion in October, the highest in four months but below analysts’ expectations of $80 billion.

Previously published positive data on business activity in the service sector and the number of new jobs in the U.S. economy have led investors to doubt that the Federal Reserve is willing to slow the pace of key interest rate increases, writes Trading Economics.

“The market got off to a nervous start this week as strong U.S. statistics hit investors’ hopes that the Fed would soften its stance in the coming months,” wrote SPI Asset Management managing partner Stephen Innes. “Ultimately, it’s more important exactly where the Fed stops, not how quickly they get to it. A stronger-than-expected labor market and positive business sentiment make it more likely that the rate will exceed 5%,” he added.

Market participants also watched for corporate news. The Dow Jones Industrial Average fell 350.76 points (1.03%) to 33596.34.

Earlier, we reported that European stock indicators on December 7 showed a contradictory mood.

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Stock Markets

Current European stock market shows a contradictory mood



european stock indexes today

European stock indexes today do not show unified dynamics during trades. Composite index of the largest companies in the region, Stoxx Europe 600, decreased by 0.29% to 437.66 points.

Current European stock market – current situation

Germany’s DAX stock index was down 0.25%. France’s CAC 40 was down 0.09% and Spain’s IBEX 35 was down 0.06%. The British FTSE 100 rose 0.16%, the Italian FTSE MIB – 0.13%.

Investors are increasingly concerned about the negative impact of tightening financial conditions on economic growth in the region and the profits of companies, writes Trading Economics. The situation was also reflected in the Euro Fx Futures.

Market participants are waiting for meetings of several major central banks next week and are assessing statements by representatives of the European Central Bank (ECB).

Inflation in the eurozone is close to a peak, ECB Chief Economist Philip Lane said the day before.

“It is too early to conclude that inflation has peaked, but I can say with confidence that we are close to peaking,” Lane told Italian newspaper Milano Finanza.

The ECB raised all three key interest rates by 75 bps in October. The benchmark interest rate on loans was raised to 2%; the rate on deposits – to 1.5%; the rate on margin loans – to 2.25%. Since July this year, the ECB has raised key rates by 200 bp.

Experts expect the lending rate to rise to at least 2% from 1.5% in December.

Meanwhile, data from Germany’s Federal Statistical Office (Destatis) released Wednesday showed that industrial production in Germany fell by 0.1% in October compared to the previous month. Analysts polled by Trading Economics had on average expected a larger decline of 0.6%.

Earlier we reported that data on a decline in Chinese exports dropped Asia’s stock market.

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Stock Markets

Asian stock market news: Data on decline in Chinese exports caused Asia’s stock market to plummet



asian stock market news

Asian stock market news: Asian stock indices fell in today’s trading after data showed a decline in Chinese exports.

China’s exports fell 8.7 percent year on year in November to $296.1 billion, official data showed. The index fell for the second month in a row (in October it dropped by 0.3%), and the rate of its decline was the highest since February 2020. Experts attribute this reduction mainly to a drop in demand in the world amid a slowdown in the global economy. Even EURODOLLAR futures were affected by the situation.

Asian stock market today – what’s happening right now?

Imports fell 10.6% year-on-year last month to $226.2 billion, after declining by 0.7% a month earlier. China’s foreign trade surplus narrowed to its lowest since April, $69.84 billion in November, down from $85.15 billion a month earlier and $71.7 billion a year earlier.

Meanwhile, investors welcomed the news of further easing of coronavirus restrictions in China. Now, entire neighborhoods and blocks will not be closed for lockdowns, as they used to be, but only residential floors and buildings. Also, people who test positive for COVID-19 will be able to self-isolate at home rather than in overcrowded hospitals. Also, schools that have not had outbreaks will have to return to the face-to-face format.

Japan’s Nikkei 225 stock index was down 0.7%. Australia’s S&P/ASX 200 index was down 0.9%. Australia’s GDP rose 0.6% in Q3 from the previous quarter, according to the country’s Bureau of Statistics. Analysts on average had expected the Australian economy to grow by 0.7% in July-September, Trading Economics wrote.

The country’s GDP grew by 0.9% in the 2nd quarter. Thus, the Australian economy has shown an upturn for the fourth consecutive quarter. but the rate of increase was the weakest in that period amid weak growth in consumer spending due to high inflation and higher interest rates. On an annualized basis, GDP rose 5.9% in Q3 after climbing 3.4% in Q2 and compared to the 6.2% expected by analysts.

Earlier, we reported that European stock markets mostly closed lower on December 5.

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