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Fear of a global recession shakes European stock markets and strains the euro

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The fear that the global economy is headed for a recession has caused most of the large European stock markets to close Tuesday’s session with losses close to 3%, in line with the negative opening of wall streetwhich has also caused a 10% drop in oil prices and the depreciation of the euro against the dollar, at its lowest since 2002.

The main indicator of the Spanish parquet, the IBEX 35, has fallen by 2.48% todaythe biggest bump since June 12, and has been at 7,959.4 points, its lowest level since the beginning of last March and which places annual losses at 8.66%.

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Investors have been even more pessimistic in the great squares of the Old Continent, which have closed with falls of 2.99% in Milan; 2.91% in Frankfurt; 2.86% in London and 2.68% in Paris, while the Euro Stoxx 50, which groups the largest listed companies on the Old Continent, dropped 2.68%.

In the same line, the euro was exchanged this Tuesday below 1.03 dollarsits minimum in the last two decades, due to the disarray of investors towards the greenback, as always happens when fears of a possible recession appear.

The euro, which has been depreciating for months due to the interest rate differential (the Fed has already raised rates twice and the ECB has not yet), has fallen to $1,023, its lowest since December 2002 and very close to parity.

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The alarms began to go off this morning after the publication of the final composite PMI index for June of the main countries of the eurozone, which registered growth, but at the lowest rate in the last 16 months in France; of the last half year in Germany, and of the last 5 and 3 months in Italy and Spain.

As explained by S&P Global, the consulting firm that prepares the index, the one corresponding to June “was affected by the first contraction of the manufacturing production in two years and due to a slower rate of growth of the commercial activity of the services sector”.

High inflation, further pressured by the war in Ukraine and sanctions against Russia, and interest rate hikes by central banks are holding back the economy and many investors fear that this strategy will end up causing a recession.

This possibility affects the oil price Given the lower demand forecasts, with which this Tuesday, Brent crude, the reference in Europe, fell almost 10% at the close of the stock markets in Europe, to 102 dollars a barrel, a price not seen since the 11th of last May.

He too natural gas TTF The session ended this Tuesday with a drop of 0.5%, although shortly before noon it reached 175 euros per megawatt hour (MWh), a maximum in four months, due to fears of a reduction in supply from Russia as a result of the ukrainian waraccording to Bloomberg data collected by Eph.

Gas prices have soared since mid-June due to stoppages in the Nord Stream pipeline and rose again last week on fears expressed by Germany that Gazprom will not revive supply after the technical stop that is scheduled between July 11 and 21 next.

Japan has indicated today that it is looking for alternatives to replace Russian gas, after Moscow decided last week to nationalize the Sakhalin-2 project, a channel through which that country obtained 8% of its natural gas imports and in which Gazprom had a 50% shareholding.

Concern was also high in Germany, whose Economy and Climate Minister Robert Habeck has warned that the gas energy crisis could have a domino effect on the market and has not ruled out intervention in gas prices. (YO)

Source: Eluniverso

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