by Diana Mandia

(Reuters) – European stocks ended in disarray on Thursday amid fears of a slowing economy and as new signs of inflationary pressures heightened fears over rates.

In Paris, the CAC 40 ended up 0.03% at 7,196.1 points. The British Footsie gained 0.21% and the German Dax lost 0.14%.

The EuroStoxx 50 index fell 0.45%, the FTSEurofirst 300 0.12% and the Stoxx 600 0.16%.

A series of disappointing economic indicators published on Thursday illustrated the difficulties of the European economy, starting with the first power of the continent, Germany, which saw its industrial production fall more than expected in July.

“The country does indeed have problems that go beyond a cyclical downturn, high energy prices and weaker demand from China,” said Berenberg analyst Holger Schmieding.

Investors also learned on Thursday that economic activity in the euro zone had recorded growth of 0.1% in the second quarter, less than initially estimated (0.3%).

These indicators add to a series of worrying data released this week, which showed a slowdown in economic activity in Europe, particularly in the services sector.

Global concerns about inflation and interest rates in the run-up to meetings of the European Central Bank (ECB) and the Federal Reserve were revived by the surprise drop in weekly jobless claims in the United States, the higher consumer inflation forecasts in the euro zone and oil production cuts by Russia and Saudi Arabia

In France, inflation should however slow a little more sharply than expected by the end of the year with an easing of tensions on food prices, said Thursday INSEE, which also raised its growth forecast. of the French economy in 2023 to 0.9% against 0.6% previously.

VALUES

In a volatile environment, defensive sectors such as utilities and healthcare, considered relatively immune to economic cycles, benefited from economic and rate fears and gained 1.29 and 1.12% respectively.

The basic resources compartment (-2.22%) on the other hand suffered after the disappointing figures for Chinese trade and the information from the Bloomberg agency that the United States and the European Union are preparing new customs duties on steel from China and other countries.

Thyssenkrup dropped 2.2% and ArcelorMittal 2.5%.

Shares in the interest-rate-sensitive technology sector fell 2% on inflation fears. Apple’s decline due to Chinese restrictions on the iPhone also weighed on the sector.

In Paris, Scor gained 4.6% following the launch of its new “Forward 2026” strategic plan.

AT WALL STREET

At the time of closing in Europe, Dow Jones gained 0.20%, while the Standard & Poor’s 500 lost 0.43 and the Nasdaq Composite 1.26%, hit in particular by fears of inflation and the fall in technology stocks in the wake of Apple (-2.9%).

CHANGES

In a volatile context and fears over rates, the dollar, perceived as a safe haven, gained 0.1% against a basket of benchmark currencies, the euro losing 0.24% to 1.0701 dollar.

RATE

Eurozone bond yields fell on Thursday, halting a four-day rise, but on a cautious note amid concerns over inflation and the ECB’s possible response next week.

The German ten-year yield lost almost 4bp to 2.6% and the two-year yield fell more than 3bp to 3%.

After a brief rise after the publication of jobless claims in the United States, the American bond markets are also down: the ten-year bond drops by around 2 basis points to 4.2%, while the two-year bond rate fell by almost 6 basis points to 4.9%.

OIL

Oil prices fall as European markets close as China’s uncertain economic outlook trumps expectations of tighter supply due to production cuts announced by Saudi Arabia and Russia.

Brent fell 0.1% to $90.51 a barrel, with US light crude (West Texas Intermediate, WTI) losing 0.02% to $87.56.

(Written by Diana Mandiá, edited by Camille Raynaud)

Copyright © 2023 Thomson Reuters