🚀 AI-picked stocks soar in May. PRFT is +55%—in just 16 days! Don’t miss June’s top picks.Unlock full list

European stocks skid on gloomy business activity data, German energy troubles

Published 06/23/2022, 03:34 AM
Updated 06/23/2022, 12:18 PM
© Reuters. FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, June 22, 2022.    REUTERS/Staff

By Sruthi Shankar and Susan Mathew

(Reuters) -European shares hit more than one-year lows on Thursday as slowing euro zone business activity heightened growth worries, while German shares dropped 1.8% after the country triggered the "alarm stage" of its emergency gas plan.

The continent-wide STOXX 600 index dropped 0.8%, with euro zone banks shedding 4.5%. Euro zone bond yields also slid as did the euro. [GVD/EUR]

The German DAX slid to over three-month lows as falling Russian supplies prompted Thursday's move - the latest escalation in a standoff between Europe and Moscow since the Russian invasion of Ukraine that has exposed the bloc's dependence on Russian gas supplies.

A S&P Global (NYSE:SPGI) survey showed euro zone business growth slowed significantly this month, and by much more than expected, as consumers concerned about soaring bills opted to stay at home and defer purchases to save money. A PMI covering the bloc's dominant services industry sank to 52.8 from 56.1.

"There was this underlying expectation that services are still doing well. The PMI's poured some cold water on that belief," said Andrea Cicione, head of strategy at TS Lombard.

Other economically sensitive sectors including automakers, miners and oil & gas stocks slipped between 2% and 3.6%.

Healthcare, utilities and some luxury names were the only gainers on Thursday.

"Until central banks get some signal to pivot towards a more dovish stance, the market will continue to focus on downside risks to growth," Ciicone said.

The European Central Bank is set to raise its deposit rate above zero next month, while U.S. Federal Reserve Chair Jerome Powell reiterated the U.S. central bank's commitment to control inflation even at the risk of an economic downturn.

Norway's central bank raised its benchmark interest rate by 50 basis points on Thursday, its largest single hike since 2002.

But traders are scaling back their bets on how far central banks will be able to lift interest rates this cycle, as recession fears grip.

European shares had briefly cut session losses to edge up tracking a rally in U.S. stock futures before moving back into the red even after a strong open on Wall Street. [.N]

© Reuters. FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, June 22, 2022.    REUTERS/Staff

The benchmark STOXX 600 has shed nearly 19% since hitting a record closing high on Jan. 5, and if losses continue, the index could confirm a bear market, or 20%, decline from a recent peak.

In company news, Valneva surged 19.6% after its COVID-19 vaccine was endorsed by the European Medicines Agency on Thursday.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.