European shares slip as weak economic data heightens growth worries

The German share worth index DAX graph is pictured on the inventory change in Frankfurt, Germany, Could 31, 2022. REUTERS/Employees

June 1 (Reuters) – European shares fell on Wednesday as weak German retail gross sales and slowing manufacturing unit exercise within the euro zone fanned worries about financial progress amid document excessive inflation.

The pan-European STOXX 600 index (.STOXX) was down -1.0%, after gaining as a lot as 0.4% earlier within the day. The benchmark shed 1.6% in Could as surging inflation stoked worries about aggressive central financial institution motion.

German retail gross sales fell a more-than-expected 5.4% in April, information confirmed, whereas manufacturing progress within the euro zone slowed final month as factories confronted provide shortages, excessive costs and a fall in demand. learn extra

“The value motion now we have seen this week in shares may be very a lot indicative of the general uncertainty within the markets at current,” mentioned Stuart Cole, head macro economist at Equiti Capital.

“Yesterday’s stronger-than-expected inflation figures from the EU re-ignited fears about how excessive rates of interest is perhaps raised typically. The important thing worry is that central financial institution actions will inadvertently induce recessions.”

Deutsche Financial institution economists raised expectations over European Central Financial institution coverage tightening and count on a 50 foundation level fee improve in September. learn extra

On the STOXX 600, declines had been led by journey shares (.SXTP) and actual property (.SX86P).

Regional bourses additionally fell – the commodity heavy FTSE 100 (.FTSE) slipped 1.0% whereas Germany’s DAX (.GDAXI) eased 0.3%.

The STOXX 600 has marked losses for all months besides March this yr, as traders additionally fearful about central financial institution coverage tightening and the fallout from the Russia-Ukraine battle.

Investor hopes that inflation might need peaked are being challenged by oil costs, which climbed to greater than $120 per barrel on Tuesday after European Union leaders agreed to a partial and phased ban on Russian oil.

“All eyes can be on the ECB assembly in Amsterdam on Thursday ninth June the place policymakers will attempt to attain a consensus on how briskly to ‘normalise’ financial coverage,” mentioned Andrew Kenningham, chief Europe economist at Capital Economics.

“Members of the ECB Governing Council are unanimous in believing that rates of interest must be raised however divided over how shortly.”

British footwear model Dr. Martens (DOCS.L) surged nearly 20% after it forecast greater annual income progress, thanks to cost hikes made in response to inflation and stronger gross sales of its sneakers and boots.

Deutsche Financial institution’s asset supervisor DWS (DWSG.DE) slumped 6.2% after its chief government officer mentioned he would step down subsequent week, as the corporate confronted allegations of deceptive traders about “inexperienced” investments. learn extra

Reporting by Susan Mathew and Shreyashi Sanyal in Bengaluru; Enhancing by Rashmi Aich, Sriraj Kalluvila and Kirsten Donovan

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