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European stock markets fell on Wednesday, extending a recent losing streak on the back of persistent worries over China, while brewer Carlsberg slumped after cutting its outlook.
The pan-European FTSEurofirst 300 index, which had its worst five-day run in more than a month last week, fell 0.8 per cent. The euro zone’s blue-chip Euro STOXX 50 index also declined by 0.9 per cent.
Carlsberg was the worst-performer on the FTSEurofirst, falling 7 per cent after cutting its profit forecast.
Worries over China have come to eclipse those over Greece’s debt problems in recent weeks, with China’s devaluation of its yuan currency on August 11 adding to investors’ unease over the state of the Chinese economy.
Chinese stocks reversed sharp declines and ended higher on Wednesday after the central bank injected more funds into the financial system for a second day in a bid to calm panicky markets.
Nevertheless, many traders remained unnerved by the situation in China.
“While there is continuing concern that the current slowdown seen in Chinese economic growth might be spreading across the region, it also seems that lack of confidence that the Chinese government and People’s Bank of China will take sufficient measures to turn things around are hurting stocks,’’ said Peregrine & Black senior sales trader Markus Huber.
ECB stimulus
The FTSEurofirst and Euro STOXX 50 both remain up by around 10 per cent since the start of 2015, helped in part by economic stimulus measures from the European Central Bank (ECB).
However, they also both remain nearly 10 per cent below their peaks for 2015 that were reached in April, given the worries about the global economy due to China and Greece.
Investors also await the minutes due later in the day of the US Federal Reserve’s last meeting, for clues on whether the US might raise interest rates next month.
Higher interest rates can often hurt equity markets, as they boost the returns on bonds and cash, and can result in increased debt payments for companies listed on the stock market.
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