European Markets Brave Weakening Growth Outlook

Bridgette Randall
22 Jul, 2022
Frankfurt

European markets inched higher and the latest private survey estimated economic growth is slowing in the eurozone. 

Private sector contracted for the first time in 15 months on weaker output and new orders, the Purchasing Managers' Index released by S&P Global showed Friday. 

The index for output declined to 49.4 in July from 52.0 in June, the index for service fell to 50.6 from 53.0, and manufacturing dropped to 49.6 from 52.1 in the corresponding months. 

The flash estimate readings will be revised in the second estimate in the next few weeks.  

The survey showed that the factory output decreased sharply and service output growth slowed. 

The ECB also lifted its key lending rate for the first time in 11 years this week, and the rate increase of half-percentage point was larger than expected. 

More worrisome, backlog of orders for both manufacturing and services also declined in the month, a first contraction in eighteen months. 

The DAX index increased 0.05% to 13,253.68, the CAC-40 index gained 0.3% to 6,216.82, and the FTSE 100 index inched up 0.08% to 7,276.37. 

The euro edged lower and closed at $1.0193 and the British pound fetched $1.197.  

Schindler Holding AG declined 3.9% to 175.0 francs after the Swiss elevator and escalator maker cut its 2022 outlook citing China market contraction and Covid-19 related restrictions. 

Second quarter revenues declined 5.6% to 2.7 billion francs and net income fell 37.2% to 152 million francs. 

Diluted earnings per share fell to 1.30 francs from 2.12 francs. 

Schindler guided annual revenues to rise between -2% and 2% from the previous estimate between 1% and 6% in local currencies and full-year net income between 620 million and 660 million francs. 

MTU Aero Engines AG increased 2.2% to 193.15 euros after the German aerospace company won orders worth $600 million of orders at the Farnborough International Airshow. 

"New orders for the geared turbofan (GTF) make up the lion