European Stocks Fall – Risks and China Data
European stocks fell during trading on Monday; Pressure on heavyweights like the ex-dividend of the Mercedes-Benz trade. And the data, which indicated a sharper decline in the activity of the Chinese factory, also reduced the risk appetite. The STOXX 600 index lost 0.8%, which would be a three-day profit session. However, trading volume is likely to decline due to the U.K. banking holidays. The former dividend factors heavily reflect in the STOXX 600. Mercedes-Benz, Bayer, Continental, and BASF have lost their reimbursable attractiveness.
The data showed that the activity of the Chinese factory decreased more than they feared in April. The widespread COVID-19 shutdown has halted industrial production. It also hampered supply chains, leading to fears of a sharp economic slowdown in the second quarter. Among individual stocks, Vestas fell 4% after reducing the outlook for the entire year operating profit margin due to the war in Ukraine and the write-off of offshore business. Adler Group S.A. lost 44.1% and fell to a record low.
Netflix faced its first streaming subscriber net loss in the last quarter after the recent increase in competition and prices for services, management seems to have focused on password sharing and the reasons that led the company to these results.
Stocks and Risks
The shares were mixed; The dollar showed stability against the backdrop of investor caution caused by high inflation; Also due to tighter monetary policy and the closure of Covid in Asia. And U.S. stock futures earned modest gains.
It is worth noting that the April drop in U.S. stocks – one of the worst since the 2020 pandemic markets collapsed; even overshadows the mood. Falling stocks, rising bond yields, and the dollar’s strength strengthen fiscal conditions ahead of the expected rise in interest rates in the U.S., U.K., and Australia.
The treasury has changed slightly since the fall on Friday. The dollar gauge has been at its highest level since 2020. The offshore yuan weakened against the backdrop of data indicating a sharp contraction in China’s economic activity, Against the background of idle factories and broken supply chains. The Japanese yen was also on its hind legs towards a green balance.
The Impact of the Russia-Ukraine War
Federal Reserve rates should rise by 50 basis points on Wednesday. This will be the most significant increase since 2000. Strategists estimate that bond yields may remain elevated shortly due to rising inflation and sharp rates from the Fed, Which is associated with a decrease in balance. Price pressures are caused by the increased value of goods, ranging from fuel to food, Partly because of the delays caused by the Russian war in Ukraine.
It is expected that these challenges may be exacerbated. The E.U. intends to propose a proposal to ban Russian oil by the end of the year; Restrictions on imports will be imposed in stages before then. Crude oil fell. Traders have weighed the escalation of tensions between Europe and Russia with the risks of China’s slowing demand.
Chinese officials promised last week to expand economic stimulus. That gave the sentiments some break before falling on Wall Street on Friday.