European Stocks Drop Amid Recession Worries
European stocks dropped on Monday as investors grew increasingly concerned about the possibility of a recession in the region. The Stoxx Europe 600 Index fell 0.7%, with all 19 industry groups declining. The index has dropped for four consecutive weeks, its longest losing streak since October 2018.
Sartorius Plunges
Shares of Sartorius AG, a German laboratory and pharmaceutical equipment maker, plunged as much as 16% after the company cut its full-year outlook. The company said it expects sales to be flat in 2020, compared to its previous forecast of a 5% to 7% increase.
Retailers Suffer
Retailers were among the worst performers on Monday, with the Stoxx Europe 600 Retail Index dropping 1.7%. Shares of Marks & Spencer Group Plc fell 4.3%, while those of Debenhams Plc dropped 4.2%.
Financials Weaken
Financials also weakened, with the Stoxx Europe 600 Banks Index dropping 1.2%. Shares of Deutsche Bank AG fell 2.3%, while those of Commerzbank AG dropped 1.7%.
Greece Slumps
The Athens Stock Exchange General Index dropped 2.3%, its biggest decline since April. Shares of National Bank of Greece SA fell 4.3%, while those of Eurobank Ergasias SA dropped 4.2%.
Oil Prices Dip
Oil prices also declined on Monday, with Brent crude falling 0.7% to $63.41 a barrel. Shares of Royal Dutch Shell Plc dropped 1.3%, while those of BP Plc fell 1.2%.
Euro Weakens
The euro weakened against the dollar, dropping 0.2% to $1.1219. The currency has declined for four consecutive weeks, its longest losing streak since October 2018.
Investors Remain Cautious
Investors remain cautious amid concerns about the global economic outlook. The European Central Bank has warned that the region’s economy could contract this year, while the International Monetary Fund has cut its global growth forecast for 2020.
Manufacturing Activity Slows
Data released on Monday showed that manufacturing activity in the euro area slowed in June, with the IHS Markit Eurozone Manufacturing PMI falling to 47.4 from 47.7 in May. The index has been below the 50 level that indicates expansion for five consecutive months.
German Manufacturing Activity Contracts
In Germany, the IHS Markit Manufacturing PMI fell to 44.3 in June, its lowest level since April 2009. The index has been below the 50 level for four consecutive months, indicating that the country’s manufacturing sector is in contraction.
U.K. Manufacturing Activity Slows
In the U.K., the IHS Markit Manufacturing PMI fell to 48.0 in June, its lowest level since February 2013. The index has been below the 50 level for three consecutive months, indicating that the country’s manufacturing sector is slowing.
Investors Remain Cautious
Investors remain cautious amid the weak economic data and concerns about the global economic outlook. The European Central Bank has warned that the region’s economy could contract this year, while the International Monetary Fund has cut its global growth forecast for 2020.
Central Banks Take Action
Central banks around the world have taken action to support their economies, with the European Central Bank cutting interest rates and launching a new round of bond purchases. The U.S. Federal Reserve has also cut interest rates and launched a new round of quantitative easing.
Outlook Uncertain
The outlook for the European economy remains uncertain, with investors closely watching economic data for signs of a recovery. The European Central Bank has warned that the region’s economy could contract this year, while the International Monetary Fund has cut its global growth forecast for 2020.