European shares are once again in the red Wednesday, weighed down by concerns over economic growth, following disappointing third quarter updates from Germany and Japan. Meanwhile, the oil price decline and worries over a potential showdown between Italy and EU over the former’s budget proposal, also hurt.
By 1125 BST, the EUROSTOXX 600 was 0.55% lower, while the EUROSTOXX 50 was 0.67% in the red. Regional bourses remained downbeat too. The German DAX lost 0.50%, the French CAC was down 0.55% and the Spanish IBEX fell 0.51%.
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German, Japan GDP contract
A major weight on investor sentiment Wednesday, was news that quarterly economic growth in the third quarter contacted in both Japan and Germany.
Preliminary data from Japan showed that its third quarter annualised GDP rate fell by 1.2%, compared with the third quarter of 2017. The larger-than-expected drop came as natural disasters, including an earthquake and a typhoon, decimated productivity and growth across the country.
The German Federal Statistics Office, meanwhile, said that Europe’s largest economy contracted by 0.2% in the third quarter of 2018, compared with the second quarter of the same year. That’s the first decline in quarterly economic growth since 2015.
“The slight decline in GDP compared to the previous quarter was mainly due to foreign trade developments: provisional calculations show there were fewer exports, but more imports in the third quarter than in the second,” Destatis said.
Adding to the European market gloom, Wednesday, was a further decline in the price of oil. Oil-related stocks were broadly in the red as concerns over weak demand worked to push the value of the energy commodity, into negative territory.
Separately, an upbeat third quarter earnings report from shipping giant Moller Maersk wasn’t enough to prop the stock up. While revenues and earnings were better-than-expected, the company’s outlook showed caution. Moller Maersk shares fell 0.09% to DKK8,722.
Maersk reduced its EBITDA profit outlook amid concerns that a protracted US-China trade dispute would weigh on demand for its services.