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Europe close: Stocks end on mixed note amid recession concerns

By Alexander Bueso

Date: Monday 16 May 2022

Europe close: Stocks end on mixed note amid recession concerns

(Sharecast News) - European shares recovered from early selling but nevertheless finished on a mixed note following very weak industrial production and retail sales figures from China spooked investors worried about a global economic slowdown.
"Last week's price action seemed to have the makings of at least a short-term bounce, but the grim data from China and some punchy comments from Andrew Bailey has torpedoed the risk-on move before it really got going," said IG chief market analyst Chris Beauchamp.

"It is certainly quite worrying that even the low valuations currently on offer in many stocks cannot tempt investors into buying - a sign of just how much the macroeconomic outlook worries everyone right now."

The pan-European Stoxx 600 edged up 0.04% to 433.67, with the UK's FTSE 100 trading 0.63% higher to end the day at 7,464.80.

Spain's Ibex 35 was also higher and the FTSE Mib was little changed, while the Dax and Cac-40 drifted lower.

China's April retail sales plunged 11.1%, almost twice the fall forecast, and the biggest drop since March 2020 as the Covid pandemic took hold, while industrial output dropped 2.9% against expectations of a small rise.

Industrial production also fell for the first time in over two years, down 2.9% against expectations of 0.4% growth and down from a 5% rise in March.

The weak data out of China fed concerns about the global economy with former Goldman Sachs boss Lloyd Blankfein saying at the weekend that there was a very, very real risk of a US recession - although it was not certain.

In its Spring growth forecasts, which were published on Monday, the European Commission warned that under a severe scenario, in which natural gas supplies from Russia were seriously restricted, the bloc's rate of expansion in 2022 would be whittled down to just 0.2% while consumer price inflation would exceed 9.0%.

For his part, Bank of England Governor warned the Treasury Select Committee of the risk for potentially apocalyptic consequences from skyrocketing food prices on the back of the war in Ukraine.

There was some division among equity strategists to be seen with those at JP Morgan of the belief that stocks should continue higher if a recession is avoided, even as Morgan Stanley warned that the S&P was headed towards 3,400 points, although a bear market bounce was possible.

In equity news, Ryanair shares fell as the low-cost carrier said ticket fare levels were lower than the company had anticipated earlier in the year.

Digital advertising group S4 Capital plunged almost 10% after a Sunday Times report described the company's recent woes over delays to its accounts, quoting current and former employees of Martin Sorrel's firm.

Vodafone shares gained after Emirates Telecommunications Group bought a 9.8% stake in the company.

Valneva dropped sharply after warning that the French vaccine maker might have to reassess its financial guidance after the European Commission informed that it plans to terminate an advance purchase agreement for its Covid-19 vaccine candidate.

Shares in French retailer Casino rose as the company started the process to sell its renewable energy unit GreenYellow.

Diploma shares fell as the company said margins would be at the top end of guidance, but first-half revenue missed estimates.



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