European Indexes Fall 3%, Italy's Trade Deficit Narrows, Pound Wobbles

Bridgette Randall
16 Sep, 2022
Frankfurt

Benchmark indexes in Europe extended losses and bond yields rose on the persistent worries of economic slowdown and deepening energy crisis. 

The World Bank in its latest report said that the global economic slowdown is accelerating at the fastest pace since the early seventies and several recession indicators are flashing warning signals. 

The multilateral bank also said that the global economy is expected to sink into a recession in 2023 as central banks around the world lift interest rates. 

In addition, the U.S. dominated institution also cited that despite the higher interest rates inflation is likely to stay elevated on the persistent supply chain problems. 

The mood also soured in financial markets after FedEx said its global shipments declined in the last two months at a pace higher-than-expected and the global parcel delivery company also withdrew its fiscal 2023 earnings outlook. 

The DAX index fell 1.3% to 12,788.31, the CAC-40 index dropped 0.9% to 6,104.77 and the FTSE 100 index fell 0.3% to 7,259.25. 

For the week, the DAX fell 2.7%, the CAC-40 declined 2.3%, and the FTSE 100 index dropped 1.7%. 

The euro edged up 0.2% to $1,0007 as investors brace for higher rates in the U.S. next week. 

 

Pound at 37-year Low 

The U.K. pound declined to a 37-year low of $1.14 as latest economic data point to economic slowdown and weakening activities. 

Retail sales in the U.K. dropped 1.6% on a monthly basis in August, the largest monthly decline so far in the year after a 0.4% rise in July, the Office for National Statistics reported Friday. 

 

Eurozone August Inflation Reaffirmed 

The Eurozone inflation was unrevised in the final estimate at 9.1% in August according to the Eurostat report released on Friday.

The inflation[s previous estimate was released on August 31 and the rate accelerated from 8.9% in July.  

 

Italy Trade Deficit Narrows In July 

Italy's trade deficit narrowed in July after exports rose at a faster pace than imports, the statistics office Istat said Friday. 

On a monthly basis, Italy's exports rose 4.1% in July reversing from the 1.9% decline in the previous month and imports advanced 3.4% the month from the 2.6% rise in the previous month.   

Trade deficit in July declined to 361 million euros from 2.5 billion euros in June. 

In July, exports rose 18.0% and imports surged 44.0% from a year ago.  

import prices rose 0.9% on a monthly basis and surged 20.6% from a year ago. 

In July, imports increased to 58.2 billion euros from 40.4 billion euros and exports rose to  57.81 billion euros from 48.98 billion euros, resulting in a trade deficit of 361 million euros compared to a trade surplus of 8.6 billion euros a year ago. 

So far in 2022, Italy has recorded a trade deficit of about 7 billion euros compared to a surplus of 38 billion in euros in the similar period in 2021. 

 

Russia Cuts Rate Again 

The Central Bank of Russia lowered its key lending rate by 50 basis points to 7.5%, matching the expectations. 

The central bank lowered the rate for the sixth time in a row but guided 2022 inflation to range between 11.0% and 13.0% before cooling down to between 5.0% and 7.0% in 2023.