Left Menu
Development News Edition

European shares slide to six-month low as recession fears rise

Reuters | Brussels | Updated: 14-08-2019 22:31 IST | Created: 14-08-2019 22:27 IST
European shares slide to six-month low as recession fears rise
Image Credit: Pixabay

European stocks tumbled to a six-month low on Wednesday, as an inversion in the U.S. yield curve following bleak data out of major economies including Germany and China pointed to a looming recession. Slumping exports sent Germany's economy into reverse in the second quarter, while Chinese industrial output growth cooled to a more than 17-year low in July, underscoring the impact of a bruising U.S.-China trade war on global growth.

Industrial data from the euro zone in June also had a poor showing. "A lot investors may look at this morning's (yield) inversion and consider it an exit sign," said Mike Loewengart, vice president of investment strategy at E*TRADE Financial Corp.

The benchmark pan-European STOXX 600 index closed down 1.7%, having touched its lowest since Feb. 15, with indexes in Germany, France, and political crisis riddled Italy falling more than 2%. Yields on two-year treasury notes rose above the 10-year yield for the first time since 2007, a metric widely viewed as a classic recession signal. That saw government borrowing costs in Germany fell to record lows.

The downbeat mood in markets came after a rare day of relief after Washington delayed tariffs on certain Chinese goods. "Its reasonably evident by Germany's GDP contraction and the dreadful Eurozone IP data that the U.S.-China tariff war is hurting Germany's export-skewed manufacturing sector, which is now bringing forward a real debate on fiscal stimulus in Germany," wrote Stephen Innes, managing partner at VM Markets.

"But on a positive note, embarking on an aggressive fiscal program while having the markets paying you to do so, given negative-yielding bonds, it might not but such a bad thing at all," Innes added. All sectors were well in the red, with trade-sensitive technology slumping 3%. The Frankfurt-dominated auto index followed with a 2.8% drop, while falling yields took banks to a more than three-year low.

Stalled growth across Europe has been led by a slowdown in the eurozone's largest economy, Germany, while the fallout from Washington's trade war with China, Brexit uncertainty, and Italy's political woes have also plagued the trading bloc. The pan-regional index has lost more than 5% so far this month, on course to match a 5.7% tumble in May which was its biggest decline in more than three years.

Limiting the index's losses were gains in some consumer staples, healthcare and utility stocks, as investors turned to defensive plays. Balfour Beatty topped the STOXX 600, up 9.3% after the British infrastructure company reported higher first-half underlying pretax profit and increased its annual cash forecast.

Also Read: Food delivery app Deliveroo to stop serving Germany



Pandemic must be impetus, not obstacle, for clean water access

To make matters worse, there are suspicions that the inadequacy of wastewater treatment methods in California, the rest of the USA, and indeed around the world may help to propagate the disease even more widely. ...

3D printing and the future of manufacturing post COVID-19

The on-demand, customizable, and localized manufacturing of product components facilitated by 3D printing has the potential to redefine manufacturing but there are certain technical, mechanical, and legal limitations that, unless ...

How UK’s 'best prepared' healthcare system failed to gauge COVID-19

The UK is proud of their public health system and its unlike any other country as around 90 percent of British public supports the founding principles of National Health Service. But without accurate data being available to stakeholders in ...

Poor on IHR capacity progress in 2019, WHO says Cambodia tops COVID-19 response

Despite being in proximity to Hubei, the original epicenter of COVID-19 pandemic, Cambodia has reported just 226 confirmed cases and zero deaths. After seeing the data, WHO appreciated Cambodias healthcare information system but experts dou...


Latest News

Delhi police officials say coronavirus changed their investigation, communication process

Donning PPE kits, mandatory Covid tests on the accused, exercising caution when lifting fingerprints and regular sanitisation of hands have become the new normal for Delhi police officials when they step out to investigate a case. They have...

Ammonium nitrate near Chennai being shifted after e-auction

Safety concerns over storage of ammonium nitrate arising in the backdrop of the explosion of the chemical in Beirut were addressed as the substance has been e-auctioned and is being shipped to Hyderabad, sources here said on Sunday. The 697...

Officials resign in Lebanon in wake of deadly blast

Lebanons information minister resigned on Sunday as the country grapples with the aftermath of the devastating blast that ripped through the capital and raised public anger to new levels. The resignation comes comes after a night of demonst...

Sonia Gandhi to remain interim chief till 'proper procedure' for electing prez is implemented: Cong

The Congress on Sunday said Sonia Gandhi will continue as interim president till such time a proper procedure is implemented in the not too distant future to elect a party chief. Congress spokesperson Abhishek Singhvi, during an online medi...

Give Feedback