(Reuters) – Sluggish U.S. economic data and hawkish central bank comments reignited fears of a global economic slowdown, while weak corporate earnings at home further dampened investor confidence, prompting a surge in Europe on Thursday. The stock market fell.
The Pan-European STOXX 600 (.STOXX) is down 0.8% at 0929 GMT and is on track for a 6-day winning streak.
Industrials (.SXNP) and luxury stocks such as LVMH (LVMH.PA) and Richemont (CFR.S) were the biggest drags in the broader market downturn.
Wall Street plunged overnight after data showed U.S. manufacturing output plunged last month and retail sales fell to the lowest level in a year, but hawkish comments from the Federal Reserve further squeezed the market.
Energy stocks (.SXEP) fell 1.9%, falling after US economic data fueled recession fears in the world’s largest economy on the back of falling oil prices.
“Economic data remain noisy and it is difficult to say that recent encouraging economic trends will continue,” said Mark Häfele, chief investment officer at UBS Global Wealth Management.
We still favor a selective stance, including a defensive equity sector and a leaner focus on high-grade and investment-grade bonds.”
Dutch Central Bank Governor Klaas Knott says the market may be underestimating the European Central Bank’s planned rate hikes and investors are taking its forecasts of rate hikes in multiples of 50 basis points more seriously. said it should be accepted.
A 50 basis point rate hike by the ECB in February is fully priced in, but in March the market was buoyed by the hope that a more aggressive move by the US Federal Reserve (Fed) would ease. It fluctuates between 25 and 50 basis points.
Investors will be watching the minutes of last month’s European Central Bank meeting and ECB President Christine Lagarde’s appearance at the World Economic Forum in Davos.
Market focus was also on corporate earnings in the US and Europe. Fourth-quarter earnings in Europe are expected to grow by 10.7% year-over-year, according to data from Refinitiv I/B/E/S.
Boohoo (BOOH.L) fell 5% as UK online fashion retailer earnings fell 11% over the key Christmas trading period, hurt by delivery disruptions and tough comparisons.
British boot maker Dr. Martens (DOCS.L) fell 23.6% after warning about its annual profit and earnings due to management problems.
Renault (RENA.PA) fell 2% after HSBC cut the French automaker’s share price from ‘buy’ to ‘hold’.
Shares of Swiss online drug retailer Zur Rose (ROSEG.S) bucked the downtrend and climbed 11.1% after it said it expects a smaller full-year core loss than earlier forecasts.
Reported by Ankika Biswas and Bansari Mayur Kamdar of Bengaluru.Edited by Sherry Jacob Phillips
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