Q4 Earnings Alert! Plan ahead with key data on upcoming stock reports - all in 1 placeSee Calendar

European shares post worst week in three months, Siemens Energy slumps

Published 06/23/2023, 03:21 AM
Updated 06/23/2023, 12:26 PM
© Reuters. The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, June 21, 2023.    REUTERS/Staff/FILE PHOTO

© Reuters. The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, June 21, 2023. REUTERS/Staff/FILE PHOTO

DE40
0.63%
DBKGn
2.24%
STOXX
0.55%

By Shreyashi Sanyal, Bansari Mayur Kamdar

(Reuters) -European shares dipped on Friday at the end of a central bank policy-packed week that reinforced views that interest rates could stay higher for longer, while shares of Siemens Energy plunged as it withdrew its annual profit outlook.

The STOXX 600 index closed 0.3% lower after data showed euro zone business growth stalled this month as the downturn in manufacturing deepened.

The index has lost 2.9% for the week, posting its worst weekly performance in over three months, as investors digested more interest rate hikes from major central banks including the Bank of England, Norges Bank and Swiss National Bank, and the spectre of elevated inflation for longer.

Investors also worried about the impact of protracted tightening cycles on global economic recovery, with concerns of a recession in the UK heightening after the BoE's larger-than-expected 50-basis-point rate hike.

"A hike was fully expected, but the magnitude of the rise surprised most," said RBC Brewin Dolphin’s head of asset allocation, Paul Danis.

"It's quite possible that by the time the Bank is finished hiking this cycle, the base rate ends up exceeding the 2007 peak of 5.75%."

Germany's DAX index shed 1.0%, leading losses among regional peers as shares of Siemens Energy sank 37.3%.

The company, which supplies equipment and services to the power sector, warned that the impact of quality problems at its Siemens Gamesa wind turbine unit would be felt for years.

The basic resources index fell for the seventh straight session, posting weekly declines of 7.9%. It was the worst performer for the week.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads.

GSK Plc rose 4.9% after it reached a confidential settlement of a U.S. litigation over claims that the British drugmaker's heartburn drug Zantac caused cancer.

Ocado (LON:OCDO) fell 5.3% in the absence of any bid developments after soaring the day before on a news report of possible takeover interest in the online supermarket and technology group.

DATA DIGEST

While euro zone business growth stalled in June, a separate reading showed German business activity slowed notably this month.

French business activity contracted this month for the first time in five months, data showed.

"There are several headwinds, including elevated uncertainty, a drag from U.S. recession, the lag effects of ECB tightening cycle, and a less supportive fiscal stance," said Clemente De Lucia, senior European economist at Deutsche Bank (ETR:DBKGn) Research.

"Until mid-2024, we expect quarterly growth rates of zero or small positives at best. This will leave the economy vulnerable to further contractions or recession."

Stock exchanges in Stockholm and Helsinki were closed on Friday.

DBKGn: is this perennial leader facing new challenges?

With valuations skyrocketing in 2024, many investors are uneasy putting more money into stocks. Sure, there are always opportunities in the stock market – but finding them feels more difficult now than a year ago. Unsure where to invest next? One of the best ways to discover new high-potential opportunities is to look at the top performing portfolios this year. ProPicks AI offers 6 model portfolios from Investing.com which identify the best stocks for investors to buy right now. For example, ProPicks AI found 9 overlooked stocks that jumped over 25% this year alone. The new stocks that made the monthly cut could yield enormous returns in the coming years. Is DBKGn one of them?

Unlock ProPicks AI to find out

Latest comments

Derick LimJun 23, 2023, 13:44
Hopefully AI divine power can rebound the European shares ...
Pwr StrkJun 23, 2023, 22:08
that mania is what's crashing everything
Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2025 - Fusion Media Limited. All Rights Reserved.