FX.co ★ European Stocks Tumble Again; Several Major Markets Fall To Multi-month Lows

European stocks plummeted on Monday, with numerous major markets experiencing their largest single-session drop, driven by escalating apprehensions that the U.S. economy might be sliding into a recession. Additionally, weak economic data from the eurozone exacerbated the decline.

Tensions in the Middle East further pressured the markets, especially with emerging reports suggesting the possibility of a pre-emptive strike on Iran by the Benjamin Netanyahu-led government to thwart potential attacks on Israeli land.

The sell-off extended to Wall Street where significant value erosion affected the Dow, Nasdaq, and S&P 500, adding to the global market distress.

The pan-European Stoxx 600 dropped 2.17%, while the U.K.'s FTSE 100, Germany's DAX, and France's CAC 40 fell by 2.04%, 1.82%, and 1.42%, respectively. Switzerland's SMI experienced a substantial 2.8% decline.

Across Europe, markets in Austria, Belgium, Denmark, Finland, Netherlands, Norway, Poland, Russia, Spain, and Sweden saw losses ranging between 2 to 4%. Portugal ended approximately 2% lower, Turkiye dropped by about 5.5%, and Greece plunged over 6%.

In the UK market, Melrose Industries plummeted by around 6.3%. Other significant losers included Severn Trent, Scottish Mortgage, United Utilities, Coca-Cola, Centrica, Rolls-Royce Holdings, and Fresnillo, each down between 4 to 6%.

Vodafone Group, British American Tobacco, M&G, BT Group, National Grid, Persimmon, BP, Segro, Shell, Endeavor Mining, Relx, Schroders, Anglo American Plc, Informa, Frasers Group, and Marks & Spencer experienced declines of 2 to 4%.

Unilever, Tesco, Associated British Foods, HSBC Holdings, Lloyds Banking Group, Barclays, AstraZeneca, and Next also registered sharp drops.

In Germany, major decliners included E.ON, Zalando, Puma, Volkswagen, BMW, Sartorius, SAP, Vonovia, Deutsche Bank, Mercedes-Benz, Hannover Rueck, Covestro, Commerzbank, Allianz, BASF, RWE, Siemens Energy, and Munich RE with losses spanning 2 to 5%.

Daimler Truck Holding, Adidas, Siemens, Bayer, Brenntag, MTU Aero Engines, Porsche, Fresenius, and Deutsche Boerse also closed significantly lower.

Notably, Infineon and Siemens Healthineers stood out by defying the trend and closing positively.

In France, Teleperformance fell over 5%, and STMicroElectronics decreased by around 4.7%. Renault and Veolia each ended lower by approximately 3.8%.

Michelin, TotalEnergies, Kering, Stellantis, Capgemini, Publicis Groupe, Sanofi, Dassault Systèmes, BNP Paribas, Credit Agricole, Societe Generale, Safran, and Carrefour saw losses ranging from 1 to 3%.

Conversely, L'Oreal and Thales managed to post moderate gains.

On the economic front, Eurozone investor sentiment significantly deteriorated in August, indicating a deeper economic downturn amidst uncertainties from looming elections in Germany and the USA, along with a fragile geopolitical climate in the Middle East.

The investor sentiment index for the eurozone fell to a seven-month low of -13.9 in August from -7.3 in July.

Final data from S&P Global revealed that the euro area's private sector activity exhibited its weakest growth in the current five-month expansion streak due to falling demand and weaker sentiment.

The final composite output index slipped to 50.2 in July from 50.9 in June, with a flash reading of 50.1. This score teetered close to the 50.0 threshold, suggesting minimal growth.

Conversely, the UK service sector showed an acceleration in growth in July, bolstered by increased demand at the fastest rate in over a year, according to final survey data from S&P Global.

The S&P Global Services Purchasing Managers' Index climbed to 52.5 in July from 52.1 in June, surpassing its flash score of 52.4.

Remaining above the 50.0 threshold for the ninth consecutive month indicated continued growth, with the acceleration marking the first since April.