The extended slowdown in economic activity in the US has once again fueled recessionary fears in the country. Goldman Sachs’s economist increased the likelihood of a recession next year to 25% from 15%. This spooked investors worldwide, including the European stock market.
Also, the unwinding of the Yen Carry Trades in the global market has caused a massive sell-off. According to a news report, Yen Carry Trades in the worldwide market was reportedly around $4 trillion last week.
However, investor sentiment remains bearish as markets cool down from increased volatility. The economic indicators in the Eurozone area are not positive either. The report showed Retail sales declined by 0.3% month-over-month in June, compared to the expectation of 0.1%.
With so much economic uncertainty surrounding the global market, the focus has shifted toward the central bank’s actions, including whether it will pursue an early rate cut.
Top Gainers and Losers in the European Stock Market
Top Gainers
The following are the top gainers in the last one week.
| Stocks | Last 7 Days Gains (in %) |
| Rolls Royce | 6.24 |
| KYGAA | 6.22 |
| Haleon PLC | 5.68 |
| Galderma Group | 5.26 |
| Rational AG | 4.85 |
Top Losers
The following are the top losers in the last one week across various sectors:
| Stocks | Last 7 Days Loss (in %) |
| Banco Bilbao Vizcaya Argentaria | 13.93 |
| Unicredit | 13.70 |
| STMICROELECTRONICS | 13.92 |
| PKOBP | 11.49 |
| ASM International | 10.46 |
| ABB Ltd. | 9.03% |
During the week, the market’s losses were not limited to one sector. The sectors with the greatest losses are financials, producer manufacturing, technology services, and consumer non-durables. Despite the losses, the Electronic Technology and Health Technology sectors are showing strength in the market.
STOXX Europe 600
The STOXX Europe 600 index is Europe’s most extensive stock index, replicating almost 90% of the European market. The overall sentiment continues to be extremely bearish. As of 7 August, the index is down by 5.02% over the last five days.
After the gap-down opening on Monday, the index trades on a bearish note. STOXX Europe 600 is now experiencing strong resistance at around 490. If the index fails to cover the gap or moves higher above the 500 level, weakness will likely persist. Below 480 is a strong support level.
FTSE 100
Last week, the UK’s Bank of England cut the short-term borrowing rates, bringing them down from a 16-year high level to support the economy and keep the growth momentum intact. Also, The UK’s consumer price index stayed within the central bank’s 2% target in June.
Despite the massive sell-off on Monday, the index closed above one of its key support levels at around 8,000 and is witnessing buying. The 8140 level is extremely resistive; the index might be challenging to break above it. If it breaks below the 8000 level, the next major support is around the 7700 level.
CAC 40
The French economy is likely to have an Olympic ripple and is expected to grow by 0.3% in the third quarter, compared to the initial forecast of 0.1%.
As of 7 August 2024, CAC 40, France’s primary stock market index, was down by 5.75% over the five days, showcasing extreme levels of volatility. Despite the cooling down, the market recovery was muted as traders avoided placing large bets, reassessed the impact of the pullback, and awaited new bullish triggers.
CAC 40 broke below one of its key support levels at around 7,300 and has formed a head-and-shoulder pattern on the daily chart, which is a bearish formation. The index is now experiencing strong support at the 7,050 level, and to reverse the bearish formation, it needs to break above the 7,320 level with solid momentum.
DAX
German factory orders rose for the first time in a year, backed by solid demand in the auto and metal sectors. However, the DAX 30 continues to witness extreme volatility. As of 7 August 2024, the index was down by more than 6.5% over the five days.
The European market’s overall momentum has turned negative. It is trading close to one of its major support levels, around 17,300. A break below could result in more selling. Conversely, the index needs to clear above the 17,750 level to break away from the bearish momentum.
Conclusion
Due to several factors, European stocks are expected to remain under pressure as we move forward. All eyes will be on central banks and their next moves, which will be crucial in determining the market’s direction. Keeping an eye on all market developments is crucial to making informed investment decisions amidst these rapidly evolving changes in the market.
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I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.
