PARIS: Eurozone blue-chip stocks fell on Wednesday as tech shares were pressured ahead of US Federal Reserve’s minutes from the June policy meeting, while weak data from the single-currency bloc and China stoked fears of a sharp hit to global growth.
The EURO STOXX 50 index closed 0.9% lower, its worst session since end May, while the broader STOXX 600 dropped 0.7%.
China’s services activity expanded at the slowest pace in five months in June, a private-sector survey showed, piling on to a raft of data signalling weakness in the world’s second-largest economy after the pandemic.
Further hurting sentiment was data that showed euro zone business activity slipped into contractionary territory. Services activity in major European economies was also hit, with France’s dominant services sector falling in June for the first time since January.
“Expectations for China’s economic reopening were arguably too high at the start of the year,” Russ Mould, investment director at AJ Bell, said. “It’s now clear this (recovery) is going to be more of a slow-burner recovery than wads of money suddenly sloshing around.” Miners fell 1.1% as global growth concerns hurt metal prices, while China-exposed luxury firm LVMH, which is Europe’s most valuable company, was down 1.1%.
Prudential Plc, which also has exposure to China, slipped 3.9%.
Citigroup cut its 2023 economic growth forecast for the euro area, citing pressures from a high interest rate environment as the ECB signalled further hikes.
Later in the day, the US Fed will release minutes of its latest monetary policy meeting when it kept interest rates unchanged but signalled it could hike rates again in the future.
“The general consensus is that the central bank has not finished raising rates, despite pausing last month,” Mould added.
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