Oct 21, 2022
VOT Research Desk
Market Insights, Considerations & Analytics
Friday saw a decline in European stock markets as political unrest in the United Kingdom persisted and rising bond yields increased expectations of a slowdown in the economy.
By 03:55 ET (07:55 GMT), the German DAX was down 1.1%, the French CAC 40 was down 1.4%, and the British FTSE 100 was down 0.4 percent.
The prospect of further aggressive interest rate hikes from the Federal Reserve, the European Central Bank, and the Bank of England sour investor sentiment, which led to the sharp increase in yields on European bonds on Friday and U.S. Treasury yields reaching 14-year highs overnight.
After six chaotic weeks marred by policy shocks, the benchmark 10-year U.K. gilt yield increased above 4% as the political turbulence in the United Kingdom continued with the resignation of Prime Minister Liz Truss.
Retail sales in the United Kingdom fell by 1.4% in September, or 6.9% year-over-year, as consumers cut back on discretionary spending. Meanwhile, Britain’s borrowing increased more than anticipated, highlighting the challenge facing Jeremy Hunt, the new finance minister, and Truss’ successor.
Friday’s survey by GfK, a market research firm, revealed that U.K. consumers continue to be among the most pessimistic ever.
In business reports, Adidas (ETR: The German manufacturer of sporting goods reduced its outlook for the full year, citing lower demand, causing its stock to fall by more than 8%.
Nissan (EPA:After the French automaker said that supply issues had a negative impact on the number of cars it sold in the third quarter, RENA) stock fell 1.9%.
EPA: EssilorLuxotticaEven though the luxury eyewear manufacturer reported a 8% increase in third-quarter revenues and noted a rebound in sales in the Asia-Pacific region, the stock of ESLX) fell 2.1%, weighed by overall concerns about a slowing global economy.
Deliveroo, LONDON: ROO) stock rose 2.7% despite the British food delivery company predicting lower-than-expected full-year revenue due to tight consumer budgets. It was feared that it would have to reduce the range once more, as it did in July.
Oil prices fell slightly on Friday as the market was caught between concerns about a slowdown in the global economy and supply restrictions from the world’s top producers.
Even though the Biden administration announced plans to release more crude from strategic reserves, U.S. crude oil inventories fell unexpectedly last week, indicating that demand in the world’s largest economy remained steady
U.S. crude futures were down 0.5 percent at $84.08 a barrel by 03:55 ET, while the Brent contract was down 0.5 percent at $91.90.
Additionally, EUR/USD traded 0.1% higher at 0.9792, while gold futures fell 0.6% to $1,627.25/oz.
