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European Bourses End Week in the Red as Recession Fears Grow

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Last updated: 08/05/2022 12:35:02

12:35 PM EDT, 08/05/2022 (MT Newswires) -- European shares closed in the red Friday amid a bleak market outlook as recession fears gained traction.

Stoxx Europe 600 fell 0.76%, London's FTSE 100 was off 0.11%, the Swiss Market Index lost 0.71%, France's CAC slipped 0.63% and Germany's DAX declined 0.65%.

A day after the Bank of England raised interest rates by the most in 27 years, Halifax data showed that home price growth in the UK slowed in July 2022, with prices falling for the first time since June 2021.

"Looking ahead, house prices are likely to come under more pressure as those market tailwinds fade further and the headwinds of rising interest rates and increased living costs take a firmer hold. Therefore a slowing of annual house price inflation still seems the most likely scenario," Halifax Managing Director Russell Galley said in a statement.

Germany's industrial production in June edged up a monthly 0.4%, beating an estimated decline. On the other hand, Italian industrial production declined 2.1%, far deeper than the estimated 0.2% fall.

"It seems likely therefore that in 3Q22, industry will act as a drag on quarterly growth, leaving the onus of growth on services, from the supply side angle. This highlights the risks to our growth forecast for 3Q22. We are currently anticipating a minor GDP expansion for Italian GDP in 2Q22, based on a continuation of the reopening effect hinging on tourism and financed by a re-composition of consumption from durable goods to services," ING senior economist Paolo Pizzoli wrote in a note.

The KOF Swiss Economic Institute's Business Situation Indicator fell slightly in July as companies were less optimistic about the business market in the next six months. KOF further said the economy is "still in good shape, but outlook [is] deteriorating" as headwinds are expected to be more pronounced in the near future.

In corporate news, Allianz (ALV.F) was down 1.57% as it reported a 52.7% drop in H1 net income attributable to shareholders. Meanwhile, the world's largest ad agency, WPP (WPP.L) upgraded its FY22 sales outlook after a positive H1. However, its shares were in the red throughout the day, settling at 7.12% at close.

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