European stocks fell on Monday in Limited trading, pushed by heavyweights like Mercedes-Benz shares trading without dividends, as crucial Chinese data fueled market speculation about a sharp slowdown in the world’s second largest economy.
The pan-European STOXX 600 index fell 1.8% and is set to score a three-day streak of straight wins, despite volumes being in drop due to UK bank holiday.
Earnings weighed heavily on the STOXX 600, as Mercedes-Benz carmaker, healthcare company Bayer, parts manufacturer for auto Continental and the chemical group BASF have lost their appeal.
The data released at the end of last week showed that the activity of the establishments in China declined more than feared in April as widespread closures due to the outbreak of the Covid-19 pandemic disrupted industrial production and disrupted supply chains.
China-related sectors such as automobiles, luxury goods, chip manufacturing and other sectors fell in the main index.
“While we can expect more supportive measures from Beijing in the coming months, virus restrictions are likely to distort economic activities,” they said. in a note from Commerzbank analysts. “Finally, the growth prospects remain difficult.”
Wall Street has closed in Strong fall on Friday, with the tech-rich Nasdaq index hitting its lowest close in nearly a year as Amazon retreated after a gloomy quarterly report and the biggest rise in inflation since 2005 fueled investor fears about strong interest rates.
The US Federal Reserve will meet this week, with traders betting on a 50 basis point hike in interest rates to combat accelerating inflation.
Overall, concerns about China’s harsh restrictions on coronavirus, the conflict in Ukraine and the tightening of US monetary policy fueled fears of a sharp slowdown in the global economy, leading to the STOXX 600 index in decline of 8.5% yoy.
There are also fears that EU countries, including Germany, Europe’s gas-dependent economic powerhouse, may stop using Russian gas in the wake of Moscow’s attack on Ukraine.
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