European Markets Extend 3-day Losses On Recession and Higher Rate Fears

Bridgette Randall
23 Aug, 2022
Frankfurt

Stocks across the euro area closed down amid rising tensions with Russia and soaring natural gas prices and slowing economic activities. 

Private sector in the euro zone contracted for the second month in a row in August after the manufacturing sector faced headwinds. 

The preliminary or flash estimate of the composite output index declined to 49.2 from 49.9 in July, S&P Global reported today. 

The index below 50 indicates contraction and above shows growth. The index declined for the second month in a row after rising for 16 months as activities expanded in the currency zone. 

Manufacturing activities declined for the third month in a row and service sector growth came to a standstill after rising cost of living sapped demand. 

The composite output index for Germany dropped to 47.6 in August, down from 48.1 in July, after the index fell deeper into the contraction zone.

For France, the preliminary reading on the composite output index declined to 49.8 from 51.7 in July. 

The output indexes in the rest of the countries in the region continued to expand marginally.  

The DAX index declined 0.3% to 13,194.23, the CAC-40 index dropped 0.3% to 6,362.02, and the FTSE 100 index decreased 0.6% to 7,488.11. 

The euro traded down and fetched 0.997 U.S. dollars and the sentiment in the foreign exchange market remained negative.  

John Wood Group Plc fell 2.4% to 146.35 pence after the engineering services company reported weaker-than-anticipated half-year results. 

Revenues in the first-half 2022 declined 0.4% to $2.56 billion and order book at the end of the quarter rose 4.7% to $6.4 billion. 

Net income in the period swung to a profit of $89 million from a loss of $11 million a year ago. 

The company guided results are expected to improve in the second-half 2022 and said revenues are expected to rise at least 9% from a year ago to $2.5 billion and full-year 2022 revenues to fall between $5.2 billion and $5.5 billion. 

The Swiss benchmark SMI index fell 152.78 points or 1.4% to 10,933.06 and the index struggled to rise above the flat-line for most of the session. 

Roche Holding AG declined 2.2% to 316 Swiss francs and the company released a digital PCR testing system that helps clinics better understand the nature of a patient