European shares extended losses on Wednesday, as renewed recessionary fears put the brakes on a rally sparked by China relaxing Covid quarantine curbs for visitors.
The pan-European Stoxx 600 index was down 1.28% in early deals after US shares fell overnight on the back of weak US consumer confidence data. All major regional bourses were lower with Germany’s DAX was down 1.87% after June prices in the state of North Rhine-Westphalia (NRW) came in 0.1% lower than in May.
However, data from Spain showed 12-month inflation had risen to 10.2% in June, up from 8.7% in May and surpassing 10% for the first time since April 1985.
“Attempts at sustaining recent rallies were short-lived, with investors unable to avoid the pervasive fear of a global slowdown,” said Interactive Investor head of markets Richard Hunter.
“With the consumer being central to US economic growth, the recent raft of pessimistic readings has led to some concerns that sentiment could become self-fulfilling as consumers hunker down in the face of higher prices, especially fuel and food.”
“The Federal Reserve will of course be aware of the deteriorating sentiment, but for the moment is showing no signs of abandoning its primary objective of battling inflation head-on.”
Just Eat Takeaway stock plunged by a fifth after Berenberg initiated coverage of the online food delivery platform and rated it a “sell”.
Shares in H&M gained 5% after the world’s second-biggest fashion retailer reported a 33% growth in quarterly profit that beat expectations.
