European Markets Settle Sharply Lower As Rate Hikes By Central Banks Fuel Recession Fears

RTTNews | 1023 дней спустя
European Markets Settle Sharply Lower As Rate Hikes By Central Banks Fuel Recession Fears

(RTTNews) - European stocks plunged sharply on Thursday, weighed down by concerns that the Federal Reserve's decision to hike interest rates by 75 basis points, and the fifth consecutive rate hike by the Bank of England might trigger a recession in the foreseeable future.

Earlier in the day, the Swiss National Bank unexpectedly increased interest rates for the first time since 2007. The SNB signaled that more tightening in future is possible.

The BoE's Monetary Policy Committee, led by Governor Andrew Bailey, voted 6-3 to raise the bank rate by 25 basis points to 1.25%, which is the highest since early 2009. The central bank has raised the bank rate by a total 1.15 percentage points since December.

The MPC forecast consumer price inflation to be over 9% during the next few months and to rise to slightly above 11% in October. The increase in October would reflect higher projected household energy prices, the bank said.

The latest projection was above BoE's May forecast, when the bank estimated inflation to peak over 10% at the end of 2022.

Inflation shot up to a 40-year high of 9% in April from 7% in the previous month, putting a severe squeeze on household income.

The U.S. Federal Reserve on Wednesday raised the target rate for the federal funds rate by a larger-than-expected 75 basis points to 1.75%, which was the biggest rate hike since 1994.

The European Central Bank last week announced its intention to hike the rate by a quarter point in July.

The pan European Stoxx 600 shed 2.47%. The U.K.'s FTSE 100 ended 3.14% down, Germany's DAX tumbled 3.31% and France's CAC 40 drifted down 2.39%, while Switzerland's SMI declined 2.86%.

Among other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Finland, Greece, Iceland, Ireland, Netherlands, Norway, Portugal, Spain, Sweden and Turkey all ended sharply lower. Russia bucked the trend and moved up sharply.

Automakers drifted lower after industry data showed European passenger car registrations declined for the tenth successive month in May, but at a slower pace.

In the UK market, Persimmon tanked 12%. Scottish Mortgage, ICP, JD Sports Fashion, IAG and RS Group lost 7 to 9%.

ITV, Whitbread, Ocado Group, Glencore, Shell, Prudential, Antofagasta, BP, Smiths Group, Natwest Group, M&G, Melrose Industries, Barclays and Lloyds Banking Group ended lower by 4 to 7%.

British fashion retailer ASOS plunged more than 30% and rival Boohoo slumped 11.8% after both reported slowing sales.

London Stock Exchange climbed 2.3%, Segro advanced 1.3% and Informa gained about 1%.

In the French market, Atos, Engie, Renault, Air France-KLM, Saint Gobain, STMicroElectronics, Faurecia, ArcelorMittal, Valeo, Airbus Group, Publicis Groupe and Kering shed 3 to 8%.

In Germany, Zalando tumbled more than 12% amid concerns about falling sales growth. Covestro and HelloFresh lost about 8.6% and 7.4%, respectively. BASF, E.ON, Infineon Technologies, Deutsche Wohnen, Brenntag, Siemens, Sartorius and BMW lost 3 to 7%.

European passenger car registrations declined for the tenth successive month in May, but at a slower pace, data from the European Automobile Manufacturers' Association (ACEA) showed.

Passenger car sales fell 11.2% year-over-year in May, following a 20.6% decrease in April. Sales totaled 791,546 units in May.

Car sales in all four key EU markets logged double-digit losses during the month, the Brussels-based ACEA said.

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