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

RTTNews | 1049 days ago
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.

read more
U.S. Pending Home Sales Unexpectedly Spike 6.1% March

U.S. Pending Home Sales Unexpectedly Spike 6.1% March

Partly reflecting a substantial increase in the South, the National Association of Realtors released a report on Wednesday showing an unexpected spike by pending home sales in the U.S. in the month of March. NAR said its pending home sales index surged by 6.1 percent to 76.5 in March after jumping by 2.1 percent to a revised to 72.1 in February.
RTTNews | 1h 19min ago
U.S. Consumer Prices Virtually Unchanged In March, In Line With Estimates

U.S. Consumer Prices Virtually Unchanged In March, In Line With Estimates

A closely watched report released by the Commerce Department on Wednesday showed U.S. consumer prices were virtually unchanged in the month of March. The Commerce Department said its personal consumption expenditures (PCE) price index edged down by less than a tenth of a percent in March after rising by an upwardly revised 0.4 percent in February.
RTTNews | 1h 23min ago
U.S. GDP Unexpectedly Dips In First Quarter As Imports Soar

U.S. GDP Unexpectedly Dips In First Quarter As Imports Soar

The Commerce Department released a report on Wednesday showing the U.S. economy unexpectedly shrank in the first quarter of 2025. The report said real gross domestic product fell by 0.3 percent in the first quarter after surging by 2.4 percent in the fourth quarter of 2024. Economists had expected GDP to rise by 0.4 percent.
RTTNews | 2h 14min ago
U.S. Private Sector Job Growth Falls Well Short Of Expectations In April

U.S. Private Sector Job Growth Falls Well Short Of Expectations In April

Payroll processor ADP released a report on Wednesday showing private sector employment in the U.S. increased by much less than expected in the month of April. ADP said private sector employment climbed by 62,000 jobs in April after surging by a downwardly revised 147,000 jobs in March.
RTTNews | 2h 39min ago
Eurozone GDP Growth Gains Strength In Q1

Eurozone GDP Growth Gains Strength In Q1

Euro area economic growth accelerated in the first quarter as exports may have benefited from higher demand from the U.S. ahead of the imposition of higher trade tariffs. The quarterly growth in gross domestic product doubled to 0.4 percent from 0.2 percent seen in the fourth quarter of 2024, preliminary flash estimates from Eurostat showed on Wednesday.
RTTNews | 2h 51min ago
Indian Rupee Rises On Trade-deal Hopes

Indian Rupee Rises On Trade-deal Hopes

The Indian rupee strengthened against the U.S. dollar in the European session on Wednesday, as investor mood was bolstered by trade-deal prospects and foreign fund inflows.
RTTNews | 3h 29min ago