European markets see declines as recession concerns persist; Germany’s Uniper down 14% on gas supply fears

KEY POINTS
  • European stocks opened lower on Thursday as investor concerns over the health of the global economy persist.
  • The pan-European Stoxx 600 index was trading 1.6% lower shortly after markets opened with all sectors in negative territory.

LONDON — European stocks were trading lower on Thursday, with all of the region’s major indexes down on the final trading day of the first half of the year.

The pan-European Stoxx 600 index was trading 1.6% lower shortly after markets opened with all sectors in negative territory.

Swedish aerospace and defense company Saab was the best performer on the index this morning. It was up 4.8% after it received a 7.3 billion Swedish crown ($713.9 million) order for two of its GlobalEye Airborne Early Warning and Control aircraft planned for delivery in 2027.

The worst performer was German energy company Uniper. Its shares were down a massive 14.3% after it withdrew its financial outlook for 2022 on Gazprom gas supply restrictions.

The company said it had received only 40% of the contractually agreed gas volumes from Gazprom since June 16 against the backdrop of war in Ukraine. It expects its adjusted earnings before interest and taxes and adjusted net income for the first half of 2022 to be significantly below last year’s levels.

Declines in Europe come as global market sentiment remains gloomy — there’s no prospect of the war in Ukraine ending anytime soon and inflationary pressures are likely to continue to build. With central banks looking to aggressively fight rising prices with interest rate hikes, there are growing fears of a global slowdown.

Data releases in Europe on Thursday included French preliminary inflation data for June which showed the country’s consumer price index rose by 5.8% from the year before, up from 5.2% in May, France’s INSEE statistics body said.

On Wednesday, European stocks closed lower as sentiment remained bearish, with investors nervous about a possible recession. Overnight in Asia-Pacific markets, Chinese markets rose on Thursday as government data showed factory activity grew in June, but most other indexes fell.

Meanwhile, U.S. stock index futures were flat during overnight trading Wednesday, as the S&P 500 prepares to wrap its worst first half in decades. In terms of the last quarter, the Dow and S&P 500 are on track for their worst three-month period since the first quarter of 2020 when Covid lockdowns sent stocks tumbling.

The tech-heavy Nasdaq Composite is down more than 20% over the last three months, its worst stretch since 2008.

In other news, investors will be digesting the latest developments from the NATO summit in Madrid. NATO leaders have invited Sweden and Finland to join the alliance after Turkey withdrew its objections to the new members and the organization reiterated its support for Ukraine as well as outlined its plans to revamp its deterrence and defense strategy.

There are no major earnings releases in Europe on Thursday.

Source: CNBC

 

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