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11.10.202200:30 Forex Analysis & Reviews: European stock market falls after the collapse of Asian stock exchanges

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On Monday, the leading stock indicators of Western Europe showed a decline amid negative dynamics of stock exchanges in the Asia-Pacific region. The general pessimism on the world markets was also provoked by investors' concern about further tightening of the monetary policy of the US Federal Reserve in the context of permanently rising inflation. In addition, the tense situation in Ukraine has returned to the agenda.

Exchange Rates 11.10.2022 analysis

Thus, at the time of writing, the composite index of the leading companies in Europe STOXX Europe 600 sank by 0.68% - to 389.21 points, reaching a weekly low.

Meanwhile, the French CAC 40 shed 0.53%, the German DAX rose a symbolic 0.05% and the UK FTSE 100 shed 0.45%.

Rising and falling leaders

The value of securities of the French oil and gas company TotalEnergies SE sank by 1.5%. The company's management proposed to organize annual negotiations on employee salaries with trade unions in France ahead of the scheduled date, provided that strikes at refineries have ended.

The quotes of the British online retailer THG PLC fell by 7.8%.

The market capitalization of the German energy company Uniper SE decreased by 7.5%.

The share price of the Austrian manufacturer of sensors, semiconductor components and lighting equipment ams-OSRAM AG fell by 6.7%.

The value of the securities of the French automotive corporation Renault SA sank by 3.1% after the company's management confirmed that it was negotiating an alliance with Japanese Nissan about future investments in Renault's new electric vehicle business.

Quotes of the French bank Societe Generale SA rose by 0.8% on the news that the company's chief operating officer, Gaelle Olivier, will leave his post at the end of 2022 due to management reshuffles.

Market sentiment

The focus of attention of participants in the European stock market on Monday is concerns about the consequences of rocket attacks in Ukraine over the weekend. In addition, investors continue to worry about the decisive steps of the world's central banks in the field of monetary policy.

On Monday morning it was reported that the Bank of England will increase the maximum volume of daily auctions for the redemption of government bonds under the temporary program. The British central bank announced the start of the program on September 28.

At the same time, the British central bank plans to fully complete the repurchase of government securities on Friday, October 14. Since the launch of the program, the BoE has held 8 auctions. In total, the central bank bought bonds for $5.5 billion, although it had previously stated that it was ready to buy securities for 40 billion pounds.

Last Friday, a stronger-than-expected labor market report was published in the United States. As a result, the September figures from the US Department of Labor increased investors' concern that the Fed will continue to raise the interest rate in an attempt to cope with record inflation.

On Monday, world media reported that Russian President Vladimir Putin plans to meet with representatives of the Security Council after the attack on a major bridge between Russia and Crimea.

Following the results of Monday's trading, the stock exchanges of the Asia-Pacific region collapsed sharply. At the same time, trading volumes were insignificant due to the holidays in Japan and South Korea. Thus, the Shanghai Shenzhen CSI 300 stock indicator sank by 2.21%, and the Shanghai Composite lost 1.66%.

The main factor of pressure on the Asia-Pacific exchanges on Monday was the securities of chip manufacturers. Thus, the quotes of Anji Microelectronics Tech and Chengdu Xuguang Electronics Co. fell by 20% and 10%, respectively, after the White House introduced export control measures. Under the new rules, Chinese companies will no longer have access to some semiconductor materials produced on United States equipment.

Such a decisive step by the American authorities, experts suggest, could provoke a tangible deterioration in trade relations between the United States and China and have serious economic consequences if China takes retaliatory measures.

Another factor of pressure on Asian stock markets was the release of fresh data that by the end of September, the country's services sector declined amid permanent disruptions related to the consequences of the coronavirus pandemic.

This week, European traders will be waiting for the release of statistical data on consumer prices in the United States. According to preliminary forecasts of experts, by the end of September, annual inflation in America slowed to 8.1% from August's 8.3%.

Desarrollado por un Irina Maksimova
experto de análisis de InstaForex
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