By Peter Nurse
Investing.com - European stock markets traded sharply lower Friday, continuing the previous quarter’s weakness with investors becoming increasingly worried about the global economic outlook as central banks tighten monetary policy to combat soaring inflation.
By 03:40 AM ET (0740 GMT), the DAX in Germany traded 0.3% lower, the CAC 40 in France fell 0.1%, and the UK’s FTSE 100 dropped 0.3%.
The pan-European STOXX 600 fell 0.4% Friday, continuing the slump after recording a drop of 9% in the second quarter, the worst three-month period since 2020.
European Central Bank President Christine Lagarde warned in a speech at the central bank’s annual forum earlier this week that the central bank will go "as far as necessary" to bring inflation back down to its 2% target.
The focus thus will be on Eurozone consumer price data, due later Friday, with investors looking for signs that inflation has peaked. German inflation unexpectedly slowed last month, but the Eurozone’s annual CPI is expected to climb to 8.4% in June, a new record after it reached 8.1% the previous month.
There was some good news with Eurozone manufacturing PMI coming in at 52.1 in June, down from 54.6 in May, but falling by less than expected. The German equivalent figure came in at 52.0, in line with expectations with the region’s manufacturing powerhouse still in expansion territory.
Elsewhere, the growth in U.S. consumer spending weakened in May for the first time this year, while Asia's manufacturing activity, with the exception of China, stalled in June, weighed by supply disruptions, rising costs, and persistent material shortages.
China offered a ray of light, as its manufacturing activity expanded at its fastest in 13 months in June, boosted by the lifting of COVID lockdowns.
In the corporate sector, Sodexo (EPA:EXHO) stock rose 4.2% after the French food services group reported better-than-expected revenue for the third quarter, citing strong growth in all business segments and geographies, helped by price hikes and post-Omicron volume recovery.
The European semiconductor sector received a negative handover from Micron's (NASDAQ:MU) weak outlook overnight, with ASML (AS:ASML), STMicroelectronics (EPA:STM) and Infineon (OTC:IFNNY) all posting significant share price losses.
Chemring (LON:CHG) stock fell 0.2%, outperforming the wider market, after the U.K. group specializing in defense and security equipment, said the U.K.'s Serious Fraud Office has closed its investigation into the company without filing charges.
Oil prices weakened Friday, heading for its third consecutive weekly fall, its worst run this year, on concerns about the strength of the U.S. economy, the largest consumer of crude in the world, and as a group of top producers increased supply.
The Organization of Petroleum Exporting Countries and allies decided to stick with its previously announced plan to increase output each month by 648,000 barrels per day in July and August but avoided discussing policy from September onwards.
By 2 AM ET, U.S. crude futures traded 0.5% lower at $105.23 a barrel, while the Brent contract fell 0.4% to $108.65. Both contracts fell around 3% during the previous session, and are on course to fall at least 2% this week.
Additionally, gold futures fell 0.8% to $1,792.85/oz, while EUR/USD traded 0.3% lower at 1.0447.