Europe midday: China data worries investors as THG rebounds
European shares opened lower on Monday, as weak economic data from China fuelled worried about the pace of the post-pandemic recovery and rising oil prices hit airline stocks.
The pan-European Stoxx 600 index was down 0.50% in early, with all major regional bourses lower. Britain's FTSE 100 was down as sterling touched a 20-month high against the euro after Bank of England Governor Andrew Bailey signalled again that the central bank was preparing to raise interest rates as inflation risks mount.
The UK economy is struggling with Brexit-related labour shortages, supply-chain bottlenecks, rising energy prices, panic buying of fuel and a spike in Covid-19 cases, with 300,000 infections reported in the week to October 17 and 852 deaths.
Asian markets fell after data showed China’s economy grew 4.9% in the third quarter - its slowest pace of growth in a year – hit by power shortages, supply chain problems, spreading Covid infections and jitters over the stability of the property market driven by China Evergrande's debt repayment problems.
China-exposed luxury stocks LVMH and Kering were both lower after Chinese President Xi Jinping’s call to expand a consumption tax.
"At the beginning of this year, it was widely expected that the Chinese economy would see annual GDP growth of around 6%, a number at the time which was thought to be somewhat on the pessimistic side. As it turns out this now looks a little too optimistic, given the sharp slowdown we’ve seen in this morning’s Q3 numbers," said CMC Markets analyst Michael Hewson.
"It’s not hard to understand why this morning’s Q3 GDP has disappointed with the various port disruptions seen throughout the quarter due to Covid restrictions, supply chain issues, as well as surging power costs and enforced shutdowns of the Chinese economy."
"The performance of the economy hasn’t been helped by the various crackdowns by Chinese authorities on various parts of the economy, as well as the problems around Evergrande and the property sector."
British Airways, Iberia and Aer Lingus owner IAG, budget carrier easyJet and cruise line operator Carnival, were all lower as oil prices rose above $83 a barrel.
UK online retailer THG rebounded to the top of the Stoxx with a 10% rise as the company said it would remove its founder’s “golden share” and seek a premium listing after its shares plummeted by more than a third last week.
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