Stock

European shares slip after US stocks suffer steepest daily drop since 2020

European and Asian shares declined on Thursday after Wall Street equities posted their worst day since early in the coronavirus pandemic due to worrying new signs of faltering economic growth.

The Stoxx Europe 600 index of the continent’s largest companies opened 1.1 per cent lower, with markets in London, Frankfurt and Paris all under pressure.

The falls followed a 4 per cent drop for the US S&P 500 share index on Wednesday, the biggest one-day decline since June 2020, with 98 per cent of the stocks in the benchmark slipping.

The sharp slide was triggered by mounting concern that inflation was undercutting global growth after weak results from consumer bellwethers underscored how higher prices were hitting both retail spending and supply chain costs.

The US retailer Target led the declines on Wednesday, plunging 25 per cent after warning that its profit margins were under pressure, a day after its larger rival Walmart issued a similar alert. Both retailers have notched their worst daily stock falls since 1987 this week.

Despite the bearish sentiment, some analysts say markets are pricing in too much recession risk.

“A recession is not inevitable, but clients constantly ask what to expect from equities in the event of a recession,” David Kostin, chief US equity strategist at Goldman Sachs said, adding that the Wall Street bank sees a roughly one-in-three chance of a US recession in the next two years.

Hong Kong-listed shares in Chinese internet group Tencent fell as much as 8.6 per cent, helping to drag the Hang Seng Tech index down 3.6 per cent and the broader Hang Seng index 2.4 per cent lower. Elsewhere in the region, Japan’s Topix and South Korea’s Kospi both shed about 1.5 per cent.

Tencent’s fall came after the Chinese internet group reported its slowest revenue growth on record. The company recorded a 51 per cent drop in profits in the first quarter due to Beijing’s crackdown on the tech sector and the impact of harsh Covid-19 lockdowns on consumer spending.

Charlie Chai, an analyst with 86Research, said Tencent’s “fairly underwhelming” results in gaming, advertising and new business services were “a reflection of the big picture [in China]” as a downswing in business confidence translated into reduced corporate spending.

With China’s economic outlook worsening, Standard Chartered cut its annual growth forecast for the world’s second-largest economy to 4.1 per cent from 5 per cent.

Shares in US tech groups also suffered on Wednesday, with Apple, Nvidia and Amazon all dropping more than 5 per cent while the Nasdaq Composite index closed down 4.7 per cent.

Additional reporting by Primrose Riordan in Hong Kong.


Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button