European stocks close without a single direction, with economic data, China and BCs

European stock markets closed this Friday (11) without a single direction, in a session marked by economic forecasts from the European Union, UK GDP data, speeches by leaders of the European Central Bank (ECB) and the Bank of England ( BoE), in addition to easing restrictions on Covid-19 in China on the radar.

In London, the FTSE 100 fell 0.78% to 7,318.04 points, while the CAC 50, in Paris, advanced 0.58%, to 6,594.62 points, and the FTSE MIB, in Milan, closed higher. of 0.25%, to 24,455.57 points.

In Madrid, the Ibex 35 index fell 0.43% to 8,098.10 points. The DAX index, in Frankfurt, closed up 0.56%, at 14,224.86 points. Finally, on the Lisbon stock exchange, the PSI 20 dropped by 1.66%, to 5,739.34 points.

The European Commission published its Autumn 2022 Economic Forecast report this Friday, which indicated that the bloc expects the eurozone economy to grow by 3.2% in 2022, with a strong deceleration in 2023. The Commission highlights that the first half was “strong”, but that Europe enters “a much more challenging phase”, with shocks provoked by the war in Ukraine that harmed global demand and with strong inflationary pressures.

On the indicators agenda, the United Kingdom announced that the Gross Domestic Product (GDP) shrank 0.2% in the third quarter compared to the previous one, with an increase of 2.4% in the annual comparison. Still, the country’s industrial production fell by 3.1% in September, year-on-year, but still above projections.

According to an analysis by Capital Economics, the recession is starting in the country and the government should tighten fiscal policy. Earlier, Bank of England (BoE) Governor Andrew Bailey confirmed that higher hikes are likely in the coming months. Already the member of the Monetary Policy Committee (MPC, its acronym in English) of the BoE Silvana Tenreyro highlighted that, for her, the bank has already tightened the monetary policy enough to return inflation to the target of 2% in the medium term, warning that an interest rate hike will still be felt by the economy.

On Friday, European Economy Commissioner Paolo Gentiloni said he expects most European Union (EU) states to be in recession in the fourth quarter of this year. The outlook for 2023 has weakened, as the EU is forecast to grow by just 0.3% in 2023. According to him, inflation should reach its peak in 2022. The idea of ​​economic contraction was also mentioned by the vice-president of the ECB, Luis de Guindos, who said that a technical recession is very likely to occur.

Also on Friday, European Central Bank (ECB) board member Fabio Panetta argued that the European Union must strengthen investments aimed at energy security.

Investors also kept on their radar the Chinese government’s announcement about relaxing some restrictions related to the covid-zero policy, such as reducing the quarantine period for foreign travelers arriving in the country and reducing the number of negative tests to enter the country in just one. . According to an analysis by Capital Economics, the forecast is that there is no certainty about the consequences on relaxation but, if successful, the approach could give the service sector a boost. If not, it will have to adopt a more rigorous response that could have been avoided “if restrictions had been applied earlier”.