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China’s Covid woes keep European stocks under pressure

Agencies
22 Nov 2022 00:00:00 | Update: 21 Nov 2022 22:29:42
China’s Covid woes keep European stocks under pressure

European shares slipped on Monday, with economically sensitive sectors like mining and industrials leading the losses on worries about the impact of surging Covid-19 cases in China.

The pan-European STOXX 600 slipped 0.1% after the index marked its fifth straight weekly gain on Friday.

Asian stocks closed sharply lower on Monday as investors fretted about the economic fallout from fresh Covid-19 restrictions in China, with Beijing’s most populous district urging residents to stay at home as Covid-19 cases rose.

“The worsening situation is coming at a time of fears of flu outbreaks, which is putting fresh pressure on commodity stocks, with mining companies feeling more pain in trading today,” said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown, reported Reuters.

Mining (.SXPP), travel & leisure (.SXTP), and industrial goods and services (.SXNP) fell between 0.5% and 1.1%, leading losses among European sectors.

Defensive sectors such as healthcare (.SXDP) and utilities (.SX6P), which are typically preferred during times of economic uncertainty, rose and helped limit broader market losses.

The benchmark STOXX 600 has recovered nearly 13% since hitting this year’s trough in September on better-than-expected earnings reports and hopes that the US Federal Reserve will shift to smaller rate hikes.

While comments from European Central Bank officials were mixed last week, ECB chief economist Philip Lane told Market News on Monday that the central bank will raise rates again in December but the case for another 75 basis point move has diminished.

“Although the pace and size of hikes are expected to slow, the prospect that higher rates will linger for longer than hoped is adding to recession worries,” added Streeter.

Data released earlier showed German producer prices fell unexpectedly on the month in October, primarily due to a dip in prices for electricity and distributed natural gas.

Julius Baer edged higher 0.5% as the bank said it was on track to reach its 2022 profitability targets despite “challenging market” conditions taking a big bite out of its assets under management.

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