Categories: Economic News

European shares fall as weak economic data weighs on sentiment

LONDON, Aug 19 (Reuters) – European stock indexes fell on Friday after German producer prices saw their biggest rise on record, while the dollar hit a one-month high as investors held prudent

Asian shares had struggled to find direction, with concerns about the health of China’s economy weighing on sentiment, and at 0820 GMT, the MSCI world equity index, which tracks shares of 47 countries, was down 0.3% on the day (.MIWD00000PUS). Read more

In Europe, German producer prices – seen as a leading indicator of inflation – saw the highest increases on record in July, data released earlier in the session showed, as the costs of energy continued to increase. Energy prices rose 105% from July 2021, mainly due to higher natural gas and electricity prices.

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Natural gas prices had hit a closing record high on Thursday. Germany’s finance ministry said on Friday that Germany’s economic outlook is gloomy. Read more

Europe’s STOXX 600 fell 0.4% on the day, on track for a 0.4% weekly decline as well (.STOXX).

German bond yields rose, with the 10-year yield gaining as much as 8 basis points to 1.184%, a four-week high, as producer price data was seen as bolstering fears of “ stagflation”, a combination of high and low inflation. growth

Meanwhile, UK consumer sentiment hit its lowest level since at least 1974 in August, with households feeling “a sense of exasperation” about the rising cost of living. Read more

British retail sales data for July were higher than expected, boosted by an increase in online spending, but volumes are expected to resume their decline as costs rise. Read more

The Bank of England has warned that high inflation is likely to push the UK into recession later this year.

“When market participants begin to return from their vacations and look back on the past days and weeks, they will find that central banks are still far from achieving their goals of curbing inflation,” rate strategists said from ING in a note to clients.

“This means a continued struggle between expectations of central bank tightening and recession fears.”

The threat of higher borrowing costs also hung over markets as no fewer than four US Federal Reserve officials signaled that there was more work to be done on interest rates, with the ‘only difference in speed and height. Read more

The US dollar benefited from the Fed’s comments, hitting a one-month high. The dollar index rose 0.2% to 107.7 and the euro traded at $1.008. The euro has lost 1.7% against the dollar so far this week.

The dollar also rose against the Japanese yen, with the pair up 0.5% to 136.54.

The 10-year U.S. Treasury yield edged higher, near a one-month high of 2.9317%.

Oil prices fell after two days of gains, expected for a weekly decline, as traders worried about a global economic slowdown. Read more

Bitcoin fell sharply to a three-week low of $21,404. Read more

Next week, investors will be closely watching the proceedings of the European Central Banks’ July meeting, as well as comments from US Federal Reserve Chairman Jerome Powell when he addresses the annual global central bank conference in Jackson Hole on August 26.

Flash PMI data for the UK and Eurozone will be released on 23 August.

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Reporting by Elizabeth Howcroft; Editing by Jacqueline Wong

Our standards: the Thomson Reuters Trust Principles.


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