The skylights of Frankfurt am Main’s banks glowed in the late afternoon.
Boris Roessler Image Alliance | Getty Images
LONDON – European shares extended losses on Friday amid a global slump, as weak US economic data stoked fears of a recession.
regional Stoxx 600 the index temporarily closed 2.82% lower, the worst day since December 2022 according to LSEG data. The index also fell below the 500-point mark for the first time since April, LSEG data showed.
All major bourses and nearly all sectors were in the red, with tech stocks closing nearly 6% lower. US giant Intel fell as much as 28% in morning trade after reporting a big earnings loss.
Financial services fell 5.22% on Friday, as banks fell 4.35%.
Thursday’s decision took the UK central bank’s key interest rate from 5.25% to 5%, following a narrow 5-4 vote among policymakers. The market is not yet convinced that the BOE will take such a step.
BOE Governor Andrew Bailey told CNBC that the direction for interest rates is “pretty clear,” but would not comment on the extent or timing of further cuts and said service inflation and wage data would be closely monitored. Market prices suggest expectations for rates to be held in September, followed by another rate trim in November.
US stock markets fell on Friday, as jitters deepened over the state of the economy and recession concerns grew.
U.S. job growth was slower than expected in July, the latest nonfarm payrolls report from the U.S. Bureau of Labor Statistics showed Friday, while the unemployment rate rose sharply. This comes after weekly initial jobless claims were higher than expected and manufacturing data eased on Thursday.
Asia-Pacific markets recorded sharp losses on Friday, with Japan’s benchmark index rising as much as 5%.
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Cedric Chehab, head of global country risk at BMI, told CNBC’s “Street Signs Asia” that the U.S.-led sell-off started a week and a half ago but picked up in the middle of this week. This is due to factors including the hawkish Bank of Japan imploding if popular trade in the short term, weak US data and volatility in earnings.
“But one thing people do not remember is that usually between the period of July and October there is a seasonal rise in volatility for the equity market, so this is not completely unexpected,” Chehab said.
“Especially after the fact that there’s been a big rally in US stocks and global stocks, the fact that earnings are a bit mixed and valuations are high, but also that monetary policy remains really tight,” he said.