On Thursday, European key stock indices declined steadily. Market makers worried about fresh statistics in the EU countries. Moreover, investors fear a dramatic increase of rates by world central banks which will affect consumer demand.
At the time of writing, the STOXX Europe 600 index of Europe's leading companies fell by 1.4% to 410.88 points. The permanent decline of this stock exchange indicator has been recorded for the fifth consecutive session.
Shares of German real estate company Alstria Office REIT-AG are the top losers among the STOXX Europe 600. At the time of writing, the company's quotes were down 14.2%.
Meanwhile, the French CAC 40 sank by 1.51%, the German DAX fell by 1.3%, and the British FTSE 100 lost 1.6%.
Top gainers and losers
The shares of German air carrier Lufthansa fell by 2.7%. The day before, the pilots' union announced a strike of the company's employees scheduled for Friday. The parties could not agree on salaries.
The market capitalization of British company Reckitt Benckiser Group PLC, which produces household chemicals and medicines, fell by 4.8%. The company's management announced that its Chief Executive Officer Laxman Narasimhan would resign his post on September 30. Nicandro Durante, senior independent director of the company's supervisory board, will become interim CEO.
The shares of French liquor producer Pernod Ricard SA dropped by 1% despite strong reports published the day before. Thus, the company increased its revenue by 21% and raised the dividends by 32% in fiscal 2022.
The shares of Australian-British mining concern Rio Tinto PLC fell by 2.6%. The company has agreed to buy 49% of Canadian Turquoise Hill Resources Ltd. stocks for $3.3 billion. At the same time, Rio Tinto owns 51% of this company's shares.
The shares of Swedish investment company EQT AB sank by 3.3%. The company set the volume of the EQT Infrastructure VI fund, which aims to invest in infrastructure projects at 20 billion euros.
On Thursday, shares of luxury goods manufacturers also declined. Thus, stocks of LVMH and Kering and Burberry fell within 2.2%-2.3%.
Current market sentiment
On Thursday, European investors focused on the latest EU macroeconomic data. Today, it became known that the Purchasing Managers' index (PMI) in industrial production in 19 countries of the euro area fell to 49.6 points in August from 49.8 points in July. The final reading was the lowest in more than two years.
According to analysts' surveys, enterprises could not sell the whole volume of production due to low demand. Consequently, they had to increase product inventory at a record pace.
Meanwhile, retail sales in Germany grew unexpectedly by 1.9% in July. The index hit its all-time high during the last six months. At the same time, experts predicted another decline by 0.4%. Sales fell to 2.6% year-on-year in July from 9.6% in June, which was also ahead of market expectations. Analysts said the key reason for the significant increase in sales was the recovery of online retailing and the food sector. However, this situation may only be the result of the summer tourist season without the coronavirus pandemic as the activity of German factories decreased even more in August.
This week, the markets continue to discuss the prospects of the US Federal Reserve and the European Central Bank's tightening their monetary policy. Moreover, their decisions have a profound effect on the global economy.
Investors fear that peak inflation in the EU, recorded in August, will force the European Central Bank to sharply increase interest rates at the next meeting in September.
At the same time, eurozone markets took into account the almost 80% probability of a 75 basis points increase in rates. For example, that figure was slightly over 50% yesterday.
However, traders focused mainly on the monthly US jobs report scheduled for release on Friday. Experts suggest that investors may react negatively to strong labor market data if it supports the basis for a continued sharp interest rate hike cycle.
Previous trading results
On Wednesday, European stock indices fell. The day before, market makers discussed the growing energy crisis, the prospects of interest rates growth by world central banks as well as the impending recession in the global economy.
Consequently, the STOXX Europe 600 index of Europe's leading companies decreased by 1.1% to 415.12 points.
Shares of Dutch software developer Wolters Kluwer N.V. were the top losers among the STOXX Europe 600 on Wednesday. They plunged by 6.2%.
Meanwhile, the French CAC 40 sank by 1.37%, the German DAX dropped by 0.97%, and the British FTSE 100 lost 1.05%.
The shares of British-Swedish drugmaker AstraZeneca plummeted by 1.1%.
British oil and gas company British Petroleum's stocks gained 0.2% on the news that its main engineering networks may be repaired and put into operation as early as next Tuesday. If the preliminary scenario occurs, BP could begin restarting its largest refinery in the US Midwest.
The market capitalization of French aircraft manufacturing corporation Airbus Group SE fell by 1.9%. The day before, the management of the aerospace company announced that its chief financial officer Dominic Asam would resign his post in early 2023 to take the position of chief financial officer at German software giant SAP SE.
Shares of Danish Danske Bank AS rose by 2% on news that the company would cancel debts of 90,000 clients due to errors in its debt collection systems.
Shares of Italian luxury goods group Brunello Cucinelli SpA plummeted by 5.9% on weak statistics for January-June 2022 financial year.
Meanwhile, Belgian clothing retailer Ackermans & Van Haaren NV stocks soared by 5.8% after a strong report for the first 6 months of 2022.
On Wednesday, European investors focused on the latest statistics of the EU countries. The day before, it became known that annual inflation in 19 countries of the euro area rose to a record 9.1% in August from 8.9% in July. Meanwhile, market experts predicted an increase in the index only to 9%.
Yesterday, stock market markers in the EU also analyzed data on Germany's labor market from the Federal Employment Agency. The data show that the unemployment rate in the country rose to 5.5% in August from 5.4% in July.
The number of unemployed in Germany rose by 28,000 to 2.497 million in August. The index has been rising for the third month in a row.
Meanwhile, analysts on average expected an increase in the number of unemployed by 28,500 and the rise in unemployment to 5.5%.
According to preliminary data from France's National Statistics Office Insee, consumer prices in the country were up 6.5% year-on-year in August. Thus, the rate of index increase declined from 6.8% in July (the peak since early 1990s). At the same time, the market had forecast a weakening to only 6.7%.
The volume of France's GDP in April-June increased by 0.5% compared to January-March. Moreover, the final data of Insee coincided with the preliminary estimate.
In August, UK stores recorded the highest prices since 2005, reflecting the jump in food costs triggered by the Russian-Ukrainian crisis. Thus, British companies' confidence collapsed to its lowest level since last March as local businesses worry about a record rise in inflation.
