European Markets Extended Weekly Losses Amid Rising Global Economic Slowdown Worries

Bridgette Randall
02 Aug, 2024
London

European markets extended losses for the second session in a row amid rising worries about the U.S. economy's health and its impact on the eurozone economy. 

Benchmark indexes in Frankfurt, Paris, and London declined in Friday's trading, and the widely followed indexes are set to close down between 1% and 4% for the week. 

The sharp reversal in market sentiment came about because several key U.S. economic indicators showed a weakening economic backdrop. 

Initial claims of jobless benefits approached a one-year high for the last week, and unit labor costs in the second quarter advanced at a slower pace of 0.5% in the second quarter. 

In addition, a private survey showed U.S. factory activities in July contracted for the third month in a row, signaling a weakening outlook. 

Moreover, the U.S. nonfarm payroll increase in July slowed to 114,000 from the downwardly revised 179,000 jobs in June, according to the latest data released by the U.S. Bureau of Labor Statistics. 

Closer to home, French industrial output rose 0.8% on the month in June from a decline of 2.2% in May, driven by a rebound in transport equipment orders, according to a report released by the statistical agency INSEE. 

On an annual basis, industrial output declined 1.2%, and manufacturing production decreased 1.4%. 

 

Europe Indexes and Yields

The DAX index decreased by 1.6% to 17,792.84; the CAC-40 index fell by 0.8% to 7,315.21; and the FTSE 100 index declined by 0.2% to 8,267.81.

European bond yields dropped to six-month lows as investors sought safety in government securities amid growing worries about the global economic slowdown and rising geopolitical tensions. 

The yield on 10-year German bonds edged lower to 2.20%, French bonds inched lower to 2.97%, the UK gilts inched lower to 3.86%, and Italian bonds decreased to 3.63%.

The euro edged down to $1.08; the British pound inched lower to $1.274; and the U.S. dollar weakened to 87.09 Swiss cents.

Brent crude decreased $0.74 to $78.81 a barrel, and the Dutch TTF natural gas fell by €0.35 to €40.75 per MWh.

 

Europe Stock Movers

Chip equipment makers were under pressure after Intel announced another disappointing quarter and its plans to lay off 15% of its staff. 

ASML declined 7.5% to €767.30, BE Semiconductor dropped 8.5% to €104.85, and Infineon Technologies dropped 4.2% to €29.81. 

AXA investments increased 2.4% to €32.59, and the French insurance company entered into talks with BNP Paribas to sell its investment unit, AXA Investment Managers, for €5.1 billion.

Engie SA increased 3% to €14.95, and the French energy utility and natural gas distributor lifted its annual 2024 outlook, citing its strong first-half results and lower-than-expected financial costs. 

Capita declined 9.2% to 17.37 pence after the UK-based outsourcing company reported a decline in first-half revenue. 

International Consolidated Airlines Group, or IAG, rose 6% to 169.40 pence, and the parent company of British Airways and Iberian Air reported strong first-half results. 

The airline group also announced its plans to reinstate its dividend for the first time since the start of the COVID-19 pandemic. 

Wizz Air Holdings decreased 4.6% to 1,411.80 pence after the discount airline reported a decline in seating capacity and passenger count in July.