The European technological stocks have witnessed a decline and are the major reason behind the overall European market share drop.
During Wednesday’s session, the European primary stock index significantly dropped to a two-week low, while the technological shares were the key reason for the worst performance. All this is because the global markets were shaken by the fear of a looming slowdown in the United States and the continuous decline of the Chinese economy.
The STOXX 600 index of the pan-European Union has experienced a fall of around 1 percent, while other key markets were declined by 0.5 percent and 1 percent, and it is also seen that the STOXX volatility index has witnessed a significant rise and attain its highest level since August 9.
Technology stocks of Europe are the primary reason for the downturn, where it is seen that the drop is around 3 percent and it is nearly one month low, which followed a selloff in United States Wall Street`s technological-based stocks, as the declining economic data is not able to meet with the anticipated data dampened the market sentiments.
China’s manufacturing activity has experienced a six-month decline during the month of August, while this is the primary factor of which the European luxury stocks such as LVMH Holding, Richemont, and Christian Dior have impacted negatively. The declining rate of these luxury stocks range from 3 percent to 5.8 percent during the month of August.
But there is a growing concern over the stagnant growth of both China and the United States, who are the giants of global economies, and this situation has pressurised the European markets over the past few months, and even the European region is struggling with their own economic challenges.
It is seen that the business activities in the Euro Zone have shown a mixed outcome. As per reports, due to the hosting rights for the Olympics 2024, France`s service sector has experienced tremendous growth in recent months, while Germany has experienced the worst performance from its service sector for the consecutive three months, which indicates that Europe`s one of the major economies is struggling and losing its optimum momentum at this point in time.
The composite purchasing manager index of HCOB has reported 51.0 on the basis of Euro Zone, which is mildly below the previous anticipation of 51.2. In the month of July, it was seen that the producer prices were falling by 2.1 per year after year, which was unable to meet up with the anticipated drop of Reuters of around 2.5 percent each year.
Trade Nation`s senior market analyst, Mr. David Morrison, has stated that the current mixed outcome from the Purchasing Managers` Index (PMI) of the Euro Zone`s service sector was not enough to cover and recover the entire negative sentiments of the market. Despite some of the positive and neutral stats, the general viewpoint still remains distrustful.
It has come to be noticed that the investors were hesitating regarding the purchase of stocks at lower rates before the release of the data, which is based on United States employment during the end of this week. The United States non-firm payroll data is yet to be released on Friday, which needs to be closely monitored to grab insights regarding the United States current economic status and what the Federal Reserve might take regarding monetary policy.
In spite of current pressure about selling, it is seen that the stocks of Europe are still up by 8.5 percent during the year, which is because of the lower anticipation of borrowing costs, which have supported the market to keep lifting, while there was a point made by the European Central Bank that if everything goes this way, we might expect a rate cut during the end days of this month.
ASML holding as individual stock experienced a decline of around 6 percent, by which it recorded as a highest loser from the STOXX 600 index. This drop has fuelled up the larger tech sector and made it week, and also there is a downgrade from UBS on the chip manufacturing unit.
The Volvo car shares declined by 5.9 percent; it is the abundance of their aim of becoming a complete electrical vehicle unit by the year 2030. This is a major reason for the investors disappointment, who create an anticipation based on a strong commitment to electric vehicles, and this might hamper the company’s growth factor and strategies negatively in the near future.
It is seen that CommerzBank`s shares declined by 2.7 percent after Tuesday’s announcement, which was made by the German government, that they will decrease their ownership stakes in the bank. This decision has triggered the concerns of investors regarding the upcoming changes and the bank’s future financial stability.
