European Stocks Close Notably Lower As Weak Data Fuels Recession Fears

(RTTNews) - European stocks closed notably lower on Monday, weighed down by rising fears of energy rationing in Europe following Russia's decision to extend a halt on gas flows through the Nord Stream 1 gas pipeline.

Moscow decision is in retaliation to the move by the Group of Seven finance ministers to cap the price of Russian oil.

Gas prices soared over 30% in early trading amid rising concerns the energy crisis might turn into an economic and financial crisis.

Disappointing economic data from the region hurt as well. Investors also looked ahead to the upcoming ECB meeting.

On the political front, Liz Truss won the election to replace Boris Johnson as prime minister of the United Kingdom. Truss will take the reins during one of the most turbulent economic periods as the country faces soaring energy bills and a rapidly deteriorating cost of living crisis.

The pan European Stoxx 600 ended 0.62% down. Germany's DAX tumbled 2.22% and France's CAC 40 shed 1.2%. The U.K.'s FTSE 100 edged up 0.09%, while Switzerland's SMI declined 0.66%.

Among other markets in Europe, Austria, Belgium, Czech Republic, Finland, Greece, Ireland and Sweden ended sharply lower.

Iceland, Netherlands, Poland and Spain also closed weak, albeit with moderate losses.

Norway, Russia and Turkiye closed higher, while Denmark and Portugal settled flat.

In the UK market, Dechra Pharmaceuticals tanked more than 10% despite the company reporting a 13.8% increase in revenue at 681.8 million sterling for the year ending June 30.

Smurfitt Kappa Group, CRH, ABRDN, IAG, Fresnillo, Coca-Cola HBC and Hikma Pharmaceuticals lost 2 to 5%.

Glencore, BAE Systems, JD Sports Fashion, Ocado Group, Kingfisher, BP, Next, Antofagasta, National Grid, Smith & Nephew and Admiral Group gained 1.3 to 4%.

In the German market, Daimler, Continental, Porsche Automobil, Deutsche Bank, Covestro, HeidelbergCement, BASF, Volkswagen, BMW, Siemens, Deutsche Post, Allianz and Infineon Technologies lost 2 to 7.2%.

In Paris, Faurecia plunged more than 9% and Valeo drifted down 8.6%. Renault ended more than 5% down, while Saint Gobai, Michelin, Air France-KLM, ArcelorMittal, Credit Agricole, STMicroElectronics and Societe Generale lost 2 to 4.3%.

Thales climbed nearly 2.5%, while Dassault Systemes and Engie posted modest gains.

On the economic front, the euro area private sector contracted for the second straight month as the service sector joined manufacturing in recording output fall in August, final data from S&P Global showed.

The final composite output index fell to an 18-month low of 48.9 in August from 49.9 in the previous month. The flash score was 49.2.

The services Purchasing Managers' Index came in at 49.8 in August versus 51.2 in July and the flash 50.2. Services activity moved into the negative territory for the first time since March 2021.

While the fall in services activity was marginal, manufacturing output declined in the past three consecutive months.

Although the overall rate of decline in the private sector remained only moderate, commensurate with GDP falling at a quarterly rate of just 0.1 percent, the latest data point to the economy undergoing its weakest spell for nine years, excluding the downturns seen during the height of the pandemic, Chris Williamson, chief business economist at S&P Global Market Intelligence said.

Germany's composite output index fell to a 27-month low of 46.9 in August from 48.1 in the previous month. The flash reading was 47.6. At 47.7, the services PMI was down from 49.7 in July and the flash score was 48.2.

At 50.4, the France's composite output index was down from 51.7 in July and signaled the slowest expansion of private-sector output in the current 17-month sequence of growth. The flash score was 49.8.

The services PMI declined to 51.2 from 53.2 in the previous month. The flash score was 51.0.

Eurozone investor confidence deteriorated to the lowest in more than two years in September signaling that the recession is deepening, survey results from the behavioral research institute Sentix showed.

The investor confidence index declined to -31.8 in September from -25.2 in August. This was the lowest value since May 2020 and weaker than economists' forecast of -27.5.

It is very likely that a significant recessionary trend has already set in, the think tank said

The UK service sector expanded at the slowest pace in the current 18-month sequence of growth amid escalating economic uncertainty and concerns about high inflation, final data from S&P Global showed Monday.

The Chartered Institute of Procurement and Supply final services Purchasing Managers' Index posted 50.9 in August, down from 52.6 in the previous month. The score was well below the flash 52.5.

Eurozone retail sales increased moderately in July, rising by 0.3% on a monthly basis, after falling by 1% in June, data published by Eurostat revealed.

Switzerland's gross domestic product advanced 0.3% sequentially in the three months ended June, after recording a 0.5% rise in the first quarter, the State Secretariat for Economic Affairs, or SECO, said Monday. GDP was expected to grow 0.4% in the second quarter.