European Stocks Decline as Growth Concerns Resurface

European stock markets experienced a downturn on Wednesday, reversing some of the gains spurred by optimism from the previous session related to developments in China. Concerns about the region’s growth outlook weighed heavily on investor sentiment.

As of 03:05 ET, the DAX index in Germany was down by 0.7%, while France’s CAC 40 and the UK’s FTSE 100 saw declines of 0.7% and 0.4%, respectively.

Growth Concerns Resurface

On Tuesday, major European indices saw significant increases following Beijing’s announcement of extensive stimulus measures aimed at revitalizing the Chinese economy—one of Europe’s key export markets—since the pandemic began. Yet, investors are now reconsidering the potential impact on broader markets in light of persistent worries about the global economic outlook.

Recent data has indicated a decline in U.S. consumer confidence, and the eurozone experienced a sharp and unexpected contraction in business activity this month, heightening fears of an impending recession. Germany’s economy contracted by 0.1% in the second quarter, with another downturn in the third quarter meeting the technical criteria for a recession—two consecutive quarters of economic decline.

In response to these challenges, the European Central Bank recently reduced its key interest rates by 25 basis points, following a similar cut in June. This economic slowdown may increase expectations for further policy easing in October.

Corporate Updates: Orange to Delist from NYSE

In corporate news, telecom operator Orange has revealed plans to delist its shares from the New York Stock Exchange, citing the financial burden associated with maintaining a secondary listing.

Additionally, shares of Rightmove fell by 1.6% after the British real estate portal declined a revised takeover offer of $8.1 billion from Australia’s REA Group, arguing that the proposal undervalued the company.

Crude Prices Retreat

On Wednesday, crude oil prices also dropped as traders re-evaluated the potential effects of new monetary stimulus from China, the world’s leading oil importer. By 03:05 ET, Brent crude had slipped by 0.3%, trading at $74.23 per barrel, while U.S. crude futures experienced a 0.4% decline, settling at $71.25 per barrel.

Despite a nearly 2% surge on Tuesday following China’s announcement of aggressive economic measures, the enthusiasm among traders is fading, as they look for additional support to enhance the economic outlook for China.

A decrease in U.S. crude oil stockpiles provided some market support, as the American Petroleum Institute reported a decline of 4.34 million barrels last week. Official figures from the Energy Information Administration are expected to be released later in the session.