European Markets Extended Losses by 1% Amid Growth Worries In the U.S. and China

Bridgette Randall
04 Sep, 2024
London

European markets extended losses on Wednesday as investors worried about economic growth in the U.S. and China. 

Benchmark indexes in Paris, London, and Frankfurt declined around 1% and extended losses for the second day in a row after U.S. manufacturing sector activities contracted for the fifth month in a row in August and fell in 21 out of 22 months. 

Moreover, a private survey in China showed service sector expansion moderated last month, despite the peak summer travel season. 

Meanwhile, the Euro Area's private sector economic growth accelerated in August from the previous month, according to a survey compiled by S&P Global. 

HCOB's Euro Area Composite PMI accelerated to 51.0 in August from 50.2 in July and expanded at the fastest pace in three months, driven by an upturn in service sector activities. 

The final reading for the composite index was revised slightly lower from the initial estimate of 51.2. 

The composite index's increase was driven entirely by the increase in the service sector, and the manufacturing sector contraction deepened and extended the decline to the 17th consecutive month. 

Producer prices in the Euro Area increased 0.8% from the previous month and declined 2.1% from the previous year in July, Eurostat reported Wednesday. 

The wholesale price increase in the month was driven by the surge in energy prices, while costs declined for intermediate, durable, and non-durable goods. Excluding energy, producer prices decreased 0.1%. 

 

Europe Indexes and Yields

The DAX index decreased by 0.6% to 18,628.44; the CAC-40 index fell by 0.9% to 7,509.29; and the FTSE 100 index declined by 0.6% to 8,249.01. 

The yield on 10-year German bonds edged lower to 2.22%, French bonds inched down to 2.96%, the UK gilts edged down to 3.96%, and Italian bonds decreased to 3.63%.

The euro edged down to $1.10; the British pound inched higher to $1.31; and the U.S. dollar strengthened to 85.01 Swiss cents.

Brent crude decreased $0.99 to $74.66 a barrel, and the Dutch TTF natural gas fell by €0.25 to €36.72 per MWh. 

 

Europe Stock Movers

Semiconductor companies led the decliners in Wednesday's trading, following heavy losses in the sector in New York on Tuesday. 

Market sentiment weakened after the U.S. Justice Department sent subpoenas to AI-chipmaker Nvidia as a part of its deepening probe into the company's antitrust practices. 

ASML Holding declined 5.4% to €737.10, STMicroelectronics dropped 2.5% to €26.67, and NXP Semiconductors plunged 5.4% to €211.0. 

Commerzbank AB dropped 1.8% to €12.85 after a Bloomberg report suggested that the German government is planning to sell between a 3% and 5% stake in the lender. 

Telia AB declined 0.5% to SEK 32.45, and the Swedish telecom company announced a restructuring plan. 

Direct Line Insurance Group declined 1.0% to 191.40 pence after the company reported weaker-than-expected first-half results. 

Oil explorers traded volatile for the second day in a row, and crude oil prices hovered near a nine-month low, weighed down by concerns over rising supply and a weakening demand outlook. 

BP plc decreased 0.1% to 415.95 pence, Shell PLC dropped 0.6% to 2,597.0 pence, and TotalEnergies edged up 0.1% to €60.59. 

Barratt Developments declined 2.2% to 509.0 pence, and the UK-based housebuilder said profit declined 75% in the year ending in June.