After three straight sessions of gains, European shares slumped on Wednesday as investors lost hope that central banks will loosen their ultra-tight inflation control measures and as data indicating a decline in regional business activity fuelled concerns about an economic downturn.
The pan-European Stoxx 600 index fell 1% as a rapid interest rate hike by the New Zealand central bank on Wednesday rattled investors and reduced risk appetite after climbing more than 5% in the previous three sessions.
After disappointing data from the US manufacturing sector, a fall in new jobs in the US, and a less-than-expected rate hike by the Reserve Bank of Australia, which rekindled expectations that central banks are at a level, the index had its best daily performance on Tuesday since mid-March. Future announcements of interest rate increases could be more modest.
According to the most recent figures, the euro zone’s economic activity declined for the third straight month in September, dash[ing] hopes that the region would avoid the possibility of a recession.
The Stoxx 600 has decreased by 18.2% so far this year as the region deals with an energy crisis made worse by the Russian-Ukrainian conflict and worries about an economic slowdown brought on by the US Federal Reserve’s and other major central banks’ ultra-tight monetary policies.
The majority of the subsectors represented on the Stoxx 600 index experienced declines, with the real estate, retail, telecom, and finance sectors leading the way.
Tesco, the largest retailer in Britain, down 4. 1% among the single stocks after it decreased its full-year profit prediction, contributing to a 0. 5% decline in the FTSE 100 index in London.
European stocks decline amid interest rate uncertainty and recession concerns
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