European Markets Drop, Euro Zone Growth Slows, UK Inflation Accelerates

Bridgette Randall
17 Aug, 2022
Frankfurt

Market indexes in Europe closed down after a fresh batch of data slowing growth in the region and rising inflation in the U.K. 

The economy in the euro area expanded at 0.6% in the second quarter, faster than the 0.5% growth in the first quarter, the statistics agency eurostat reported Wednesday. 

The economic expansion was slower than previously estimated at 0.7% in the preliminary report released on July 29. 

On an annual basis, the revised economic growth in the second quarter fell to 3.9% from 5.4% in the first quarter rate. The annual growth was revised lower from the previous estimate of 4%.  

Consumer prices accelerated in July and inflation perked up to 10.1%, a four-decade high, from 9.4% in June, said the Office for National Statistics Wednesday. 

On a monthly basis, consumer prices rose 0.6% in July after rising at 0.8% in June. 

"Food prices rose notably, particularly bakery products, dairy, meat and vegetables, which was also reflected in higher takeaway prices," said the ONS Chief Economist Grant Fitzner.

Home prices in the U.K. rose at 7.8% annual rate in June after rising at 12.8% in May, a separate report from the ONS noted today. 

The average home prices increased 20,000 pounds from a year ago to 286,000 pounds in June. 

The DAX index declined 2.1% to 13,626.71, the CAC-40 index dropped 1% to 6,528.32, and the FTSE 100 index fell 0.3% to 7,515.75. 

Cineworld Group Plc plunged 60% to a record low 8.25 pence after the operator of movie theaters said audience sizes are low because of "limited" movie releases. 

"Despite a gradual recovery of demand since reopening in April 2021, recent admission levels have been below expectations. 

These lower levels of admissions are due to a limited film slate that is anticipated to continue until November 2022 and are expected to negatively impact trading and the Group's liquidity position in the near term," noted the company in its trading update released Wednesday. 

The company is looking to deleverage its balance sheet and cautioned "any deleveraging transaction will likely result in very significant dilution of existing equity interests in Cineworld."

The company operated 9,189 screens at 750 sites around the world with 68% screens located in the United States. 

Uniper SE declined 12% to 6.81 euros after the company reported first-half loss of 12 billion euros after Russia reduced its delivery of natural gas. 

The utility company received 15 billion euros of capital injection from the German government last month. 

Sanofi SA declined 5.6% to 81.67 euros after the French drugmaker discontinued its breast cancer treatment, amcenestrant, after the drug was ineffective in several trials.