Get all your news in one place.

100’s of premium titles.
One app.

Start reading

Get all your news in one place.

100’s of premium titles. One news app.

Start reading

AFP

Business

Stock markets slide despite easing recession risks

Recession United States Interest Rates Credit Suisse London

Shares in the giant retailer initially dropped after it offered a disappointing outlook as inflation weighs on consumer spending. ©AFP

London (AFP) - Equities slid on Tuesday, with investors brushing off positive data as a risk that central banks will push interest rates higher and economies into recession.

Private-sector growth has accelerated across Europe this month, according to key surveys from S&P.

The agency's purchasing managers' index (PMI) data was published alongside a separate survey showing that German investor confidence rose again in February.

Taken together, the reports increased the chances that major European economies would avoid recession this year, analysts said, despite expectations that the US Federal Reserve and other central banks will continue to raise interest rates to further cool inflation.

"At a time of such uncertainty over inflation, interest rates, and the economy, these forward-looking business surveys carry extra weight," said Craig Erlam, senior markets analyst at the brokerage firm OANDA.

The eurozone PMI showed the indicator at 52.3 this month, up from 50.8 in January -- a reading over 50 represents economic growth.

Output in the single currency bloc turned around in January after a slump tied to supply chain disruptions, the Covid pandemic and the war in Ukraine.

Recovery was evident also in Britain, where the purchasing managers' index hit 53 in February, up from 48.5 the previous month.

The "UK has a greater chance of avoiding a recession according to the latest health check of the economy", said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

The improving economic situation is "boosting expectations that both the ECB and BoE will tighten their respective monetary policies further" to further push down sticky inflation, said City Index analyst Fawad Razaqzada, referring to the European Central Bank and Bank of England.

Europe's main stock indices ended the day roughly a half percentage point lower.

Wall Street headed lower upon returning from a three-day holiday weekend, with the Dow shedding 1.6 percent in late morning trading.

"We have recently found ourselves back in a ‘good news is taken as bad news’ period for stocks, with today’s raft of improved PMI surveys across Europe and the US resulting in widespread selling on the premise of ‘higher for longer’ interest rates," said Joshua Mahony, senior market analyst at online trading platform IG.

Elsewhere, oil prices traded mixed Tuesday as worries about higher interest rates and possible recession played off against hopes that China's economic reopening from strict Covid lockdowns would fuel a surge in demand.

Shares in Credit Suisse hit a record low of 2.52 Swiss francs as rumours circulated that chairman Axel Lehmann could face a probe by regulators over his public comments regarding the outflow of client funds from the troubled bank.

Switzerland's number two bank has been shaken by a series of scandals since losing billions in the 2021 collapse of Greensill and the implosion of US asset manager Archegos, leading to a change in chief executive and a massive restructuring.

Both Credit Suisse and the Swiss financial markets regulator Finma declined to comment.

Shares in Walmart fell 2.5 percent at the start of trading after the retailer offered a disappointing outlook as inflation weighs on consumers.

But they quickly rebounded and were up 0.6 percent in late morning, with the company having posted better-than-expected profits over the critical holiday-season quarter.