FRANKFURT (Dow Jones) — The European stock markets ended trading at the end of the week with significant losses. The prospect of further interest rate hikes in the fight against inflation threatens to push the economy into recession. The increasing number of corporate profit warnings is a warning sign that investors are shedding risk assets such as stocks, it said. The DAX lost 2.0 percent to 12,284 points after marking a new low for the year at 12,181 points. The Euro Stoxx 50 fell by 2.3 percent to 3,349 points. Here the new low for the year is 3,330 points.

    Bonds were also sold in view of the European Central Bank’s current interest rate policy, but there will be another one for the coming meeting rate hike by 75 basis points. As a result, the yield on 10-year bonds rose to over two percent. And the euro also remained under pressure, suggesting that foreign investors are continuing to withdraw from Europe as recession looms. The common currency traded at a low of $0.97, its lowest level in around 20 years.

    recession in Europe

    The Purchasing Managers’ Indices for manufacturing and services in the euro zone also fell more than expected in September. For Thomas Gitzel, chief economist at VP Bank, the signs could hardly be clearer: the euro zone is on course for recession. What’s more, the recession is likely to have already begun in the current third quarter. The high energy prices are currently choking the economy. The increased gas and electricity prices weighed not only on consumers but also on companies. Private households reduced their consumption because of the high gas and electricity prices. The economic consequences of the Ukraine war are now only really becoming apparent and could hardly be more brutal.

    The European governments will probably have no choice but to cap gas and electricity prices in order to avoid private and corporate bankruptcies. The current situation is in a way comparable to the corona pandemic. Unconventional measures are now required to prevent the worst – a large wave of insolvencies.

    Oil, mine and car values ​​under pressure

    While oil and gas stocks and mining stocks have held up well year-to-date due to high energy prices and inflation, they have now been sold in light of the weakening economy. The corresponding sub-indices lost 5.9 and 5.7 percent respectively. The auto sector was down 4.1 percent. “I think it’s a combination of factors: inflation is reducing disposable income, fears of recession are dampening demand and higher energy prices are increasing production costs,” said Stifel analyst Daniel Schwarz, looking at the automakers’ prospects.

    A possible capital increase pushed Credit Suisse 12.4 percent into the red. As Reuters reported, the measure would be part of the corporate restructuring that the Board of Directors has initiated. According to the report, various scenarios for the downsizing of the investment bank are also being discussed, including a large-scale withdrawal from the investment banking business in the USA. As Citigroup noted, while a withdrawal from the US would make strategic sense, it would entail not inconsiderable practical difficulties.

    After the suspension of the annual forecast, Hypoport (-46%) collapsed. Demand in real estate financing and in the corporate finance business has so far been very weak in the second half of the year. Market observers had expected that demand for real estate financing would weaken after a strong first half of the year, but not to the same extent and speed. Varta buckled by 34.2 percent. The company has withdrawn its targets for the current year. The background to this is the cost of energy and raw materials, which has risen further compared to the assumption in the most recent forecast, with limited or delayed options for passing them on to customers.

    Jungheinrich, on the other hand, gained 3.5 percent: The company surprisingly specified its outlook and was above market expectations for the key indicators.

    RTL (+0.5%) and M6 (+8.1%) also increased. The investors were waiting for imminent bids for the French RTL subsidiary M6, it said in the trade. Thomas Rabe, CEO of both RTL Group and Bertelsmann, confirmed to the Financial Times that non-binding offers would be accepted. The background is the failed planned merger between M6 and TF1 due to high antitrust requirements.

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    Index Closing Development Development Development

    . was absolute in % since

    . beginning of year*

    Euro Stoxx 50 3,348.60 -78.54 -2.3% -22.1%

    Stoxx 50 3,336.63 -69.79 -2.0% -12.6%

    Stoxx 600 390.40 -9.36 -2.3% -20.0%

    XETRA DAX 12,284.19 -247.44 -2.0% -22.7%

    FTSE-100 London 7,008.45 -151.07 -2.1% -3.0%

    CAC-40 Paris 5,783.41 -135.09 -2.3% -19.2%

    AEX Amsterdam 639.28 -18.12 -2.8% -19.9%

    ATHEX-20 Athens 1,916.25 -52.72 -2.7% -10.5%

    BEL-20 Brussels 3,420.99 -78.16 -2.2% -20.6%

    BUX Budapest 38,657.41 -891.30 -2.3% -23.8%

    OMXH-25 Helsinki 4,391.40 -85.85 -1.9% -19.6%

    ISE NAT. 30 Istanbul 3,555.67 -25.80 -0.7% +75.6%

    OMXC-20 Copenhagen 1,528.77 -11.30 -0.7% -18.0%

    PSI 20 Lisbon 5,678.63 -191.19 -3.4% -1.5%

    IBEX-35 Madrid 7,583.50 -191.20 -2.5% -13.0%

    FTSE-MIB Milan 21,066.55 -732.56 -3.4% -20.3%

    RTS Moscow 1,141.81 -32.80 -2.8% -28.5%

    OBX Oslo 1,026.00 -44.65 -4.2% -4.0%

    PX Prague 1,168.13 -30.58 -2.6% -18.1%

    OMXS-30 Stockholm 1,817.96 -19.95 -1.1% -24.9%

    WIG-20 Warsaw 1,457.78 -60.41 -4.0% -35.7%

    ATX Vienna 2,731.46 -101.74 -3.6% -26.0%

    SMI Zurich 10,137.78 -159.87 -1.6% -21.3%

    * at the end of the day

    FOREX last +/- % Fri 9:10am Thu 5:06pm % YTD

    EUR/USD 0.9718 -1.2% 0.9787 0.9815 -14.5%

    EUR/JPY 139.16 -0.6% 139.26 139.53 +6.3%

    EUR/CHF 0.9539 -0.8% 0.9590 1.0183 -8.1%

    EUR/GBP 0.8902 +1.8% 0.8739 0.8713 +5.9%

    USD/JPY 143.18 +0.6% 142.25 142.19 +24.4%

    GBP/USD 1.0921 -3.0% 1.1202 1.1263 -19.3%

    USD/CNH (Offshore) 7.1350 +0.7% 7.1087 7.0852 +12.3%

    Bitcoin

    BTC/USD 18,718.66 -2.4% 19,293.59 18,841.91 -59.5%

    CRUDE OIL last VT settlem. +/- % +/- USD % YTD

    WTI/Nymex 78.36 83.49 -6.1% -5.13 +11.3%

    Brent/ICE 85.94 90.46 -5.0% -4.52 +16.2%

    GAS VT Settlem. +/- EUR

    Dutch TTF 180.00 187.47 -4.0% -7.47 +207.5%

    METALS last day before +/- % +/- USD % YTD

    Gold (Spot) 1,646.28 1,671.30 -1.5% -25.02 -10.0%

    Silver (Spot) 18.83 19.68 -4.3% -0.84 -19.2%

    Platinum (Spot) 862.30 904.83 -4.7% -42.53 -11.2%

    Copper Future 3.36 3.49 -3.8% -0.13 -24.2%

    YTD relative to previous day’s close

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    Contact the author: [email protected]

    DJG/thl/ros/raz

    (END) Dow Jones Newswires

    September 23, 2022 12:10 PM ET (16:10 GMT)

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