European stocks traded more than 1% lower on Friday morning, after a round of weak activity data (PMIs) from the region fueled recession fears, as investors continued to digest recent rate hikes in the US and in various parts of Europe.
At around 6:50 am (GMT), the pan-European stock index Stoxx 600 was down 1.56% to 393.53 points.
Preliminary PMIs from S&P Global showed that the eurozone and UK economies are contracting at the fastest pace in 20 months, amid inflationary pressures stemming from the energy crisis triggered by Russia’s war in Ukraine.
In Germany, which is most strongly feeling the effects of the Russian-Ukrainian conflict, the contraction in activity is the most severe in 28 months.
The latest PMI figures reinforce concerns that the global economy is heading for a recession after a series of central banks raised interest rates throughout the week.
On Wednesday (21), the Federal Reserve (Fed, BC of the USA) raised interest rates and signaled more increases, in a new attempt to contain persistent inflation in the USA. With the same purpose, the Central Banks of England (BoE), Switzerland (SNB) and Norway (Norges Bank) raised interest rates yesterday.
Commenting on the PMIs, S&P economist Chris Williamson signaled that a eurozone recession is likely as “companies report worsening business conditions and intensifying price pressures linked to rising energy costs.”
In the coming hours, attention will turn to US PMIs and an event with Fed officials, including its chairman, Jerome Powell.
In this week’s rate decision, Powell indicated that the Fed intends to act aggressively to bring inflation back to the official 2% target. In August, the US annual consumer inflation rate (CPI) was 8.3%.
At 7:03 am (GMT), the London Stock Exchange dropped 1.55%, the Frankfurt Stock Exchange dropped 1.36% and the Paris Stock Exchange dropped 1.02%. Milan and Madrid had losses of 1.66% and 1.48%, respectively. Lisbon had an even more expressive fall, of 2.64%.
Source: CNN Brasil