European stocks fall 1% as markets struggle to shrug off recession fears
LONDON — European stocks were lower Thursday, as global markets see renewed volatility after a brief recovery following last week’s tumultuous trading.
The pan-European Stoxx 600 dropped 1.2% in early trade, with basic resources shedding 2.1% to lead losses as all sectors and major bourses slid into negative territory.
In terms of individual share price movement, Aroundtown fell more than 8% to the bottom of the European blue chip index after JPMorgan downgraded the real estate company’s stock to “underweight” and cut its target price.
European stocks closed lower on Wednesday, reversing gains made in the previous sessions as global volatility continued and market sentiment shifted to a more negative setting amid fears over surging inflation and slowing economic growth.
U.S. stock futures dipped early on Thursday after the major indexes slipped into the red at the end of regular trading and investors weighed the likelihood of a recession after comments from Federal Reserve chair Jerome Powell.
Powell told Congress on Wednesday that the central bank is “strongly committed” to bringing down inflation after the rate hit a 40-year high in the United States. He also noted that a recession is a “possibility” — a fear that has continued to weigh on Wall Street.
Meanwhile in Asia-Pacific markets overnight, sentiment was more mixed as investors continued to monitor recession concerns.
On the data front in Europe, flash estimates of French and German PMI (purchasing managers index) readings for June came in weaker than expected, adding to recession fears.
The German composite PMI, which captures manufacturing and services activity, dropped to 52.0 from May’s 54.8, below a forecast of 54.0 by analysts in a Reuters poll. France’s composite reading came in at 52.8, down from 57.0 in May.