Europe close: Stocks end mixed after soft euro area GDP figures

By Alexander Bueso

Date: Thursday 08 Jun 2023

Europe close: Stocks end mixed after soft euro area GDP figures

(Sharecast News) - European shares finished on a mixed note as the latest economic data showed that the eurozone dipped into a technical recession, even as investors kept a watchful eye on rate moves after surprise increases from Australia earlier in the week.
The pan-European Stoxx 600 index drifted lower by 0.02% to 460.7.

In parallel, Germany's Dax edged up by 0.18% to 15,989.96, while the FTSE Mib jumped 0.81% to 27,275.04.

Spain's Ibex 35 on the other hand drifted down by 0.23% to 9,338.30.

Sentiment was also hit by an OECD forecast on Wednesday the global economic growth will rise only moderately over the next year as the full effects of central bank rate hikes are felt.

In the Eurozone, official data showed the single currency bloc had tipped into recession after a series of downward revisions.

GDP fell by 0.1% in the first quarter when compared to the previous three months, revised down from an earlier estimate of growth of 0.1%.

It followed a 0.1% contraction in the fourth quarter of 2022, meaning the Eurozone economy has now shrunk for two successive quarters, the technical definition of recession. It was originally estimated that fourth-quarter GDP was flat.

Eyes were now on the Federal Reserve's next rate decision scheduled for the next week.

"Bank of Canada hiked rates and said more may be needed - again some think it was a surprise but really it was always on the cards," said Markets.com analyst Neil Wilson.

"Is there a read across for the Fed next week? Perhaps...the BoC has been in front of the Fed and this move - coming after it paused its hiking cycle earlier in the year - suggests the Fed may opt to 'skip', a narrative officials have been leaning into lately based on their comments."

"Play, pause or skip? It's all about cutting the engines and letting the super tanker drift into harbour without crashing the boat and the pier. A lot will depend on the previous day's CPI inflation data; we know the labour market remains robust, albeit business surveys point to a marked slowdown and recessionary indicators are flashing."

In equity news, Wizz Air shares dropped despite the company saying that it expected a return to net profits in 2023 on the back of higher demand.


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