European Stocks Fall as China Data Disappoints
European stocks declined on Thursday as weak economic data from China weighed on the markets. Luxury stocks were among the worst performers, with shares of companies such as LVMH and Kering falling sharply.
The Stoxx Europe 600 Index dropped 0.7%, with all 19 industry groups in the index declining. The index has been volatile in recent weeks, as investors weigh the potential economic impact of the coronavirus pandemic.
The declines came after data showed that China’s industrial production and retail sales both fell in August. The data was seen as a sign that the world’s second-largest economy is still struggling to recover from the pandemic.
The declines were led by luxury stocks, which have been hit hard by the pandemic. Shares of LVMH, the world’s largest luxury goods company, fell 4.2%. Kering, the parent company of Gucci and Yves Saint Laurent, dropped 4.7%.
Other sectors were also hit hard. Banks were down 1.2%, while automakers fell 1.3%. Technology stocks, which have been a bright spot in recent weeks, were down 0.7%.
The declines came despite a rally in U.S. stocks, which rose after the Federal Reserve announced a new round of stimulus measures. The Fed said it would buy $40 billion of corporate bonds and $500 billion of Treasury securities each month.
The euro was also weaker, falling 0.3% against the dollar. The British pound was down 0.2%.
Oil Prices Fall as Demand Remains Weak
Oil prices fell on Thursday as demand remains weak due to the coronavirus pandemic. Brent crude, the international benchmark, fell 1.2% to $43.50 a barrel. U.S. crude fell 1.3% to $41.10 a barrel.
The declines came despite a surprise drop in U.S. crude inventories. The Energy Information Administration reported that U.S. crude inventories fell by 1.3 million barrels last week, more than the 800,000-barrel drop expected by analysts.
The drop in inventories was seen as a sign that demand is slowly recovering, but the market remains oversupplied. The Organization of the Petroleum Exporting Countries (OPEC) and its allies have agreed to cut production by 9.7 million barrels per day, but the cuts have not been enough to offset the drop in demand.
European Central Bank Keeps Rates Unchanged
The European Central Bank (ECB) kept interest rates unchanged on Thursday, as expected. The ECB said it would continue to provide stimulus to the economy, but it did not announce any new measures.
The ECB said it would continue to buy bonds at a rate of €20 billion per month until at least the end of the year. It also said it would keep its deposit rate at -0.5%, and its main refinancing rate at 0%.
The ECB said it expects the euro area economy to contract by 8.7% this year, before rebounding by 5.2% in 2024. It also said it expects inflation to remain below its target of 2% for the foreseeable future.
Investors Remain Cautious
Despite the recent rally in U.S. stocks, investors remain cautious about the outlook for the global economy. The coronavirus pandemic has caused widespread disruption, and it is unclear when the global economy will return to pre-pandemic levels.
The ECB’s decision to keep rates unchanged was seen as a sign that the central bank is not yet ready to start tightening monetary policy. The ECB said it would continue to provide stimulus to the economy, but it did not announce any new measures.
The market is also watching the U.S. presidential election closely. The outcome of the election could have a major impact on the global economy, and investors are waiting to see how the election will play out.
Outlook
European stocks fell on Thursday as weak economic data from China weighed on the markets. Luxury stocks were among the worst performers, with shares of companies such as LVMH and Kering falling sharply. Oil prices also fell as demand remains weak due to the coronavirus pandemic.
The European Central Bank kept interest rates unchanged, as expected. The ECB said it would continue to provide stimulus to the economy, but it did not announce any new measures.
Investors remain cautious about the outlook for the global economy. The coronavirus pandemic has caused widespread disruption, and it is unclear when the global economy will return to pre-pandemic levels. The outcome of the U.S. presidential election could also have a major impact on the global economy.