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European Stocks Fall As China Fears Grow; UK stocks lagged

(Bloomberg) — European stocks fell in light trade, as China’s central bank’s decision to cut its key interest rate unexpectedly failed to reassure markets about the country’s economic outlook, while UK blue chips underperformed after record UK wage growth. .

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The Stoxx Europe 600 was down 0.6% at 8:53 am in London, and volumes were 37% below the average for the past 30 days at this time of day. The People’s Bank of China cut interest rates to support an economy facing new risks, raising concerns about the impact on global growth. The sudden move came shortly before the release of disappointing economic activity data for the month of July.

In Europe, real estate and insurance lagged behind all other sectors. Among the individual movers, Marks & Spencer Group Plc jumped in after raising its forecast, forecasting earnings growth in 2023 as it gained market share in groceries, apparel and household items. Jeweler Pandora A/S also gains after raising its full-year organic revenue forecast.

“Although policymakers are rightly looking to prevent a collapse in China, we believe the real estate sector problems are a reflection of the structural downturn that will shape the Chinese economy for years to come,” said Susana Cruz, a strategist at Liberum Capital. “In any case, weakness in the real estate and consumer sectors in China will have ramifications for European and British companies.”

The FTSE 100 fell as the pound initially gained after UK wage growth accelerated at its strongest pace on record, underlining concerns by the Bank of England that it has yet to break the inflation fueling wage prices across the economy.

European stocks gave up part of the year’s gains this month as concerns persisted about China’s economic woes, especially in the real estate market, and rates peaked higher than expected. August has also been a negative month for the Stoxx 600 over the past decade.

Stocks in focus:

  • European sectors exposed to China, such as luxury goods and mining, after disappointing economic activity data for July showed growth in consumer spending, industrial output and investment falling overall and unemployment rising.

To learn more about stock markets:

  • Slowing inflation crucial to recovery in UK stocks: Valuation

  • M&A Watch Europe: Tenaris, AssetCo, and Kenmare Resources

  • London’s battle to retain its rosters is far from over: ECM Monitoring

  • US stock futures unchanged; Design Remedies, OptimizeRx Fall

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— with the assistance of Michael Messika.

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