European and Asian stocks fell on Thursday after Wall Street stocks announced their worst day since the start of the coronavirus pandemic amid worrying new signs of slowing economic growth.
The Stoxx Europe 600 index of the continent’s largest companies opened 1.1% lower, with markets in London, Frankfurt and Paris under pressure.
The decline was followed by a 4 percent decline in the US stock index S&P 500 on Wednesday, the biggest one-day decline since June 2020, with 98% of shares in the benchmark falling.
The sharp decline was driven by growing concerns that inflation is undermining global growth, as weak consumer performance highlighted how higher prices are affecting both retail and supply chain costs.
The US retailer Target topped the decline on Wednesday, falling 25% after warning that its profit margins were under pressure, a day after its bigger competitor Walmart issued a similar warning. Both retailers reported their worst daily decline in inventories since 1987 this week.
Despite bearish sentiment, some analysts say markets are pricing at too high a risk of recession.
“A recession is not inevitable, but customers are constantly asking what to expect from stocks in the event of a recession,” said David Costin, chief US equity strategist at Goldman Sachs, adding that Wall Street Bank sees an approximately one in three chances for a US recession. over the next two years.
Shares of Chinese Internet group Tencent in Hong Kong fell 8.6 percent, helping the Hang Seng Tech Index fall 3.6 percent and the broader Hang Seng Index 2.4 percent lower. Elsewhere in the region, Japan’s Topix and South Korea’s Kospi are down about 1.5 percent.
Tencent’s decline came after the Chinese Internet group announced its slowest revenue growth in history. The company recorded a 51% drop in profits in the first quarter due to Beijing’s repression of the technology sector and the impact of severe Covid-19 blockades on consumer spending.
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Charlie Tea, an analyst at 86Research, said Tencent’s “pretty amazing” results in gaming, advertising and new business services were “a reflection of the big picture.” [in China]”As a decline in business confidence translated into reduced corporate costs.
As China’s economic outlook deteriorated, Standard Chartered lowered its annual growth forecast for the world’s second-largest economy to 4.1% from 5%.
Shares in US technology groups also fell on Wednesday, with Apple, Nvidia and Amazon falling more than 5%, while the Nasdaq Composite index fell 4.7%.
Additional reports from Primrose Riordan in Hong Kong.
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