European Stock Market Hit Three Week Low on Economic Worries

European stock market futures are pointing to a positive ending for one of the volatile weekly stock tradings. European stock market fell to three week low on Thursday amid higher than expected economic contraction and slowing economic growth.
The poor quarterly performance from big names like Volkswagen and British domestic bank Lloyds added to investor’s concerns.
Bourses all over Europe sustained heavier selling, with European Stoxx 600 index plunged more than 2.2% on Thursday.
Germany’s Dax was the worst performance across all European stock markets. It fell close to 3.5% following data highlighted that Germany’s economy contracted by 10.2% for the second quarter. The market analysts were expecting an economic contraction of around 9%.
“It’s an astounding figure — minus 10.1%,” writes Henrik Böhme, an economic analyst for German state broadcaster DW. “Never before in Germany’s postwar history has the country’s economy slumped as sharply as in the second quarter of 2020.”
Stock markets across Europe fell sharply in Thursday trading. France’s CAC 40 slid 2.1% and the UK FTSE 100 has lost 2.3% of the value.
The economic data from the United States added to investors’ concerns. The U.S. GDP contracted by 32.9% in Q2, indicating the largest quarterly drop in history. Meanwhile, U.S. weekly jobless claims stood around 1.434 million.  
“The stock market has to look forward and most economic data looks backwards. Investors should be prepared for a choppy process of data digestion, but not be surprised that the market feels the future is better than the present and that unprecedented stimulus and liquidity exist to drive valuations,” David Bahnsen, Bahnsen Group said.
European stock markets were also hit by poor quarterly numbers. Volkswagen has slashed its quarterly dividend by more than a third as the automaker experienced a huge drop in revenue and demand. Meanwhile, the UK’s Lloyds Banking Group added £2.4 billion to deal with expected customer defaults as the bank claims that the lockdown had hit the British economy stronger than expectations.
What Does it Mean?

  • Crude oil dropped on economic worries.
  • The dollar fell against the basket of currencies.
  • Gold price is stable at record highs.
  • Euro USD pair trading remained mixed. 




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