Europe midday: Shares extend losses despite steady EZ GDP data
European shares extended losses on Tuesday on the back of weak Wall Street and Asian sessions as investors fretted over a raft of expected interest rate hikes this week, fanning concerns about the global economy tipping into recession.
The pan-regional Stoxx 600 index was down 0.86% at 1145 GMT, with all regional markets lower. Britain’s FTSE was off 0.84% as a report from the International Monetary Fund said the domestic economy was set to shrink 0.6% this year, down 0.9 of a percentage point from October’s forecast and the worst outlook for any G7 country this year.
Three years on from its painful and fractious departure from the European Union, Britain has virtually had to send out a search party to find the tangible economic benefits of Brexit. Recent polls suggest few Britons can actually name any and the number of people who think the decision was a mistake is growing – adding to deepening economic gloom.
Hargreaves Lansdown analyst Sophie Lund-Yates said the IMF’s downgrade was a direct contrast to other major economies who have seen their outlooks upgraded because of resilient consumer demand”.
“The UK is facing some specific problems, including its over-exposure to high energy retail prices, which are weighing on household budgets.”
Elsewhere, economic activity in the eurozone held up at the end of 2022 despite the drag from an unexpected contraction in Germany, its largest economy.
According to Eurostat, Eurozone gross domestic product expanded at a quarter-on-quarter clip of 0.1% during the fourth quarter.
That beat economists' forecasts for a contraction of 0.1%, as in part as slightly better-than-expected outcomes in France, Italy and Spain offset an unforeseen 0.2% drop in German GDP.
In France, inflation stood at 7.0% in January, up from 6.7% in December, according to preliminary figures, as energy prices and food prices increased.
On the equities front caterer Compass Group was boosted by an upgrade to ‘buy’ at HSBC.
UniCredit shares urged as the Italian bank announced plans to hand back $5.7bn to shareholders after record profits. The news boosted stocks in the sector, with Bank of Ireland, Sabadell, Banco BPM and Commerzbank all posting gains.
Reporting by Frank Prenesti for Sharecast.com