European Stocks Close Sharply Lower On Recession Fears

(RTTNews) - European stocks closed sharply lower on Thursday, the first session of September, as worries about grown amid looming interest rate hikes rendered the mood bearish and triggered widespread selling in several sectors.

Rising concerns about a recession following disappointing data on manufacturing activity in Asia and Europe, and falling commodity prices weighed on stocks.

Markets are betting that the U.S. Federal Reserve and the ECB will both raise their key borrowing costs by 75 basis points when they meet later this month.

The pan European Stoxx 600 dropped 1.8%. The U.K.'s FTSE 100 drifted down 1.86%, Germany's DAX tumbled 1.6% and France's CAC 40 fell 1.48%, while Switzerland's SMI ended 1.76% down.

Among other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Finland, Greece, Iceland, Ireland, Netherlands, Norway, Poland, Spain and Sweden all ended sharply lower.

Portugal and Turkiye ended with moderate losses, while Russia bucked the trend and closed higher.

In the UK market, Entain, ICP, Rolls-Royce Holdings, 3I Group, Glencore, Ocado Group, British Land, Segro, Melrosed Industries, Reckitt Benckiser, Endeavour Mining, Antofagasta and Fresnillo fell 4 to 7.6%.

JD Sports Fashion, Pearson, Centrica and Avast bucked the trend and closed higher.

In Paris, ArcelorMittal ended more than 6% down. Unibail Rodamco, Dassault Systemes, Faurecia, Valeo, Airbus Group, Kering, Air France-KLM, Safran, LVMH and Credit Agricole lsot 3 to 4%.

In the German market, Zalando ended lower by about 4.6%. MTU Aero Engines, Puma, Sartorius, Bayer, Infineon Technologies, Deutsche Bank, Deutsche Post, Covestro, SAP, HelloFresh and Brenntag shed 2 to 4%.

On the economic front, the euro area manufacturing activity shrank for the second straight month in August, adding to fears of recession in the currency bloc, final survey data from S&P Global showed.

The final factory Purchasing Managers' Index declined to a 26-month low of 49.6 in August from 49.8 in the previous month. The flash score was 49.7. The reading was below the neutral 50.0 mark for the second straight month.

Final survey results from S&P Global showed the UK manufacturing sector registered its sharpest contraction since May 2020 on steep decreases in production and order intake. The Chartered Institute of Procurement & Supply factory Purchasing Managers' Index fell to 47.3 in August from 52.1 in July. But the score was above the flash estimate of 46.0.

This was the first sub-50.0 PMI reading since May 2020, suggesting a contraction in the manufacturing sector.

Data from Eurostat revealed that the euro area jobless rate fell to a historic low in July despite fears of recession, falling to a seasonally adjusted 6.6% from revised 6.7% in June. In the same period last year, the rate was 7.7%.

Germany's retail sales grew 1.9% in July from a month earlier, data released by Destatis showed. Sales were forecast to fall by 0.4%.

Switzerland's consumer price inflation accelerated unexpectedly in August to its highest level in twenty-nine years, data from the Federal Statistical Office showed.

Consumer prices rose 3.5% year-on-year in August, just above the 3.4% stable rate of increase in July. Economists had expected inflation to remain steady at 3.4%.

The manufacturing sector in China fell into contraction territory in August, the latest survey from Caixin showed on Thursday with a manufacturing PMI score of 49.5.

That's down from 50.4 in July, and it moves beneath the boom-or-bust line of 50 that separates expansion from contraction.

China's manufacturing sector unexpectedly contracted in August as power cuts and temporary factory closures due to the heatwave dampened production and sales, survey results from S&P Global showed on Thursday.

The Caixin manufacturing Purchasing Managers' Index fell to 49.5 in August from 50.4 in July.

The reading fell below the neutral 50.0 mark for the first time since May. The score was forecast to fall to 50.2.