Thu, December 08, 2022

Negative Data Develops into Eurozone Crisis

Wibest – Eurozone Crisis: Close up of some 100 and 50 euro bills

On Wednesday, due to the subdued dour signals from Deutsche Bank and Aston Martin slide in commodity-linked stocks, European stock markets were flat. The eurozone crisis manufacturing and services surveys also accumulate worries on the outlook for growth.

Surveys by the purchasing manager in July showed weaker-than-expected eurozone business growth.

The decline was due to a reduction in manufacturing. There are also some indicators that suggested conditions will get worse next month.

France’s CAC 40 declined 0.2% after the data, while Germany’s DAX cut gains.

A senior market economist at Rabobank, Teeuwe Mevissen said, “German manufacturers, especially in the car industry, are pretty anxious about looming tariffs which seems to be suppressing the sentiment within the sector.”

In addition, “It all depends on how things will go between the U.S. and China and the U.S. and European Union because the manufacturing industry is very export-oriented.”

In the midst of extensive changes to restart business on the earnings front, shares in Germany’s biggest bank declined 3.7% after it reported a bigger-than-expected loss.

Meanwhile, those in luxury carmaker Aston dropped 23.2% after it cut its annual forecast for wholesale sales.

Trade Talk Offers Positive Signals

Wibest – Eurozone Crisis: Economic and Financial (ECOFIN) Affairs Council

On Thursday, the setbacks were offset by the positive signs on U.S.-China trade talks and the prospect of a supportive message from the European Central Bank.

Peugeot and German chemicals maker Covestro AG had positive earnings.

Soaring around two-week highs hit a day earlier, the pan-European stocks benchmark STOXX 600 was trading flat within the eurozone crisis.

Recovering strongly from declines in May that were the worst in more than two years. Stocks have been unstable again in the past two weeks.

Meanwhile, the forecast for corporate earnings in the near-term were called down by investors. The anticipations of the major central banks loosening monetary policy will continue to prop up the sentiment.

In a morning note, Nordea strategist Sebastian Galy said, “We view the behavior of the equity market as driven by expectations of Fed easing and a consequent recovery in the economy.”

He also said, “We also view earnings as in a slight recession for the next two quarters, the market is looking beyond.

In addition, “Looking at longer-term growth and whether current policies will achieve them.”

Update on Shares of Semiconductors

Basic materials glided 1.5%, with a decline in iron ore prices and a Credit Suisse downgrade to “underperform” taking shares of Rio Tinto down 4%.

London’s commodity-heavy pushed FTSE 100 0.5% lower.

Texas Instruments Inc hinted results that a global slowdown in microchip demand would not be as long as dreaded.

Meanwhile, shares of Infineon, STMicroelectronics, and Spintronic increased between 1.1% and 2.4%.

Chip stocks assisted the technology sector grew by 0.7%.

On Wednesday, fresh business polls suggested the decrease in manufacturing deepened in July.

Europe’s stock markets mostly reduced by mid-morning.

A trend also allowed more gloomy outlooks and disappointing earnings figures, and then Europe’s stock markets were mostly lower by mid-morning.

The benchmark Euro Stoxx 600 plunged 0.3% at 390.52, while the U.K. FTSE also glided 0.9% and the German DAX increased by 0.1%.

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