Europe close: Stocks slip as investors mull outlook for interest rates
By Alexander Bueso
Date: Monday 06 Feb 2023
(Sharecast News) - European shares were mostly lower at the start of the week after the previous Friday's US payrolls data sparked worries about a longer timetable for interest rate rises, while tensions between Washington and Beijing were heightened after a Chinese surveillance balloon was shot down in American airspace.
The pan-European Stoxx 600 index was down 0.78% at 457.17 by the end of trading, with nearly all major bourses lower.
Milan's FTSE Mib was the exception, edging up 0.27% to 27,022.33
In parallel, the yield on the benchmark 10-year Bund rose 11 basis points to 2.298% while euro/dollar slipped 0.69% to 1.0721.
"A gloomy tone continues to prevail across stocks this afternoon, as investors continue to react to Friday's job numbers," said Chris Beauchamp, chief market analyst at IG.
"Friday's report stalled the risk rally in its tracks, and put pressure on stocks in a significant way. For European markets which have enjoyed such a strong start to the year, this may be just a pullback, but for US indices there is a real danger that indices could reverse course entirely. Should the latest jobs report be followed up by more strength, a renewed push on tightening by the Fed could be the result."
In the background, strategists at JP Morgan appeared to have turned more cautious, telling clients that: "Crucially, we think the fundamental confirmation for the next leg of the rally will end up lacking, consequently Q1 will likely mark a high-water mark for the market."
In economic news, eurozone retail sales fell a little more than expected in December, according to figures released by Eurostat.
Sales declined 2.7% on the month following a 1.2% increase in November and versus expectations for a 2.5% fall. On the year, eurozone retail sales were 2.8% lower in December, following a 2.5% decline the month before.
Separate data showed German factory orders bounced back in December led by large-scale order demand.
Factory orders rose 3.2% in December compared with a 4.4% fall in November on a price-adjusted basis, the statistics office Destatis said on Monday.
The increase was mainly driven by large-scale orders, in particular for electricity distribution apparatus, engines and turbines, and air and spacecraft machinery, Destatis said. Excluding these, orders fell 0.6% in December.
Eurozone investor morale in February showed improvement for the fourth consecutive month, but was still in negative territory as worries over a stagnant economy remained, a Sentix survey showed on Monday.
The research firm's index for the single currency bloc came in at -8.0 points for February from -17.5 in January, against forecasts of -12.8.
"The increase of 9.5 points signals that a recession is off the table for the time being. Instead, the scenario of stagnation is gaining in contour," said Sentix managing director Patrick Hussy in a statement.
"The absence of an energy crisis and the rosy corporate news are contributing to the turnaround from the original recessionary path. However, the following must be critically observed: So far, the improvement in all subcomponents is running at a negative level."
In equity news, Rothschild & Co.'s shares shot 17% higher to reach an all-time higher following reports that the Rothschild family was planning on taking the investment bank private.
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN