On Monday, key European indices are declining amid the news that the European Commission downgraded the GDP growth forecast of the region's states. In addition, market participants are concerned about the prospects of global economic growth amid a permanent increase in geopolitical tensions.
At the time of writing, the composite index of the leading companies in Europe STOXX Europe 600 decreased by 0.1% to 433.07 points. Since the beginning of 2022, the index has already lost more than 10%.
The French CAC 40 index declined by 0.27%, the German DAX dropped by 0.59%, and the British FTSE 100 index gained 0.59%.
Securities of the largest budget airline in Europe - Irish Ryanair Holdings Plc - declined by 3.3%. In the current financial year, the company's net loss decreased by 65%. At the same time, Ryanair management was unable to give a forecast for 2022 due to the conflict in eastern Europe, as well as the ongoing pandemic in some countries around the world. At the end of March, the company reported yearly losses of $369 million.
British manufacturer of technical products Diploma PLC lost 5.8% at the time of writing. Even the strong financial statements published the day before failed to support the company's shares. For example, Diploma PLC increased its net profit and revenue in the previous quarter, and also increased its dividend payments.
The capitalization of the Italian manufacturer of water pumps Interpump Group S.p.A. grew by 7.3%, thanks to the fact that the company's financial statements for the first quarter significantly exceeded market expectations.
Vodafone Group PLC, one of the world's largest mobile operators, rose by 2.8% on news that Emirates Telecommunications Group Co, the UAE's national Internet service provider, had bought a 9.8% stake in the British company.
Shares of French carmaker Renault lost 0.6%. The company recently announced that it was selling a controlling stake in the Russian AvtoVAZ to the research institute FSUE NAMI.
The main downward factor for the stock market today was the news that the European Commission lowered its 2022 gross domestic product (GDP) growth forecast for the euro region to 2.7% from the 4% announced in February. At the same time, the preliminary scenario of GDP growth for next year worsened to 2.3% from 2.7%.In addition, representatives of the European Commission assumed that at the end of the current year inflation in the euro area would rise to 6.1% from 2.6% in 2021.
Previously, the projected increase in inflation rates in both the Euro-region and the European Union reached a mark of 3.5%. According to the latest data, consumer prices in some Central and Eastern European countries may even reach double-digit numbers.
According to Eurostat, in March, the deficit of foreign trade balance of Eurozone countries amounted to 16.4 billion euros against a surplus of 22.5 billion euros in annual terms. Herewith the foreign trade deficit was registered by the EU for the fifth month in a row. Experts believe the main reason for such a stable decline is an increase in the cost of imports amid soaring energy prices.
By the way, the volume of imports increased by 35.4%, and the volume of exports jumped only by 14% in annual terms in March.
The data on the slowdown of the second-largest economy in the world became another tangible pressure factor for the leading indices of the European stock market on Monday.
Thus, according to the information published at the beginning of the trading session, last month, retail sales in China dropped by 11.1% on a yearly basis. Announced by experts, the results almost twice exceeded the forecasted market decline. In this case, the level of industrial production in the country decreased by 2.9% against the expected slight growth. Such values of the Asian region indicates the tangible damage caused to one of the largest economies in the world by lockdowns against the background of the spread of COVID-19.
This week, stock market participants in Europe are likely to continue to follow the course of the conflict between Russia and Ukraine. Due to the ever-increasing geopolitical tensions, Finland and Sweden have officially declared their desire to apply for NATO membership.
