- STOXX 600 Falls: The STOXX 600 index dropped 0.3% as tech and bank stocks declined, with the technology sub-index losing around 1% and euro zone banks slipping 1.3%.
- Carlsberg Slumps: Carlsberg shares fell nearly 8% after Britvic rejected its $3.9 billion takeover bid, while Britvic’s shares surged over 11%.
- Economic Data and Volatility: German and French business activity slowed, contributing to market volatility, although the STOXX 600 is still set for modest weekly gains despite last week’s sharp decline.
European shares edged lower on Friday, with the STOXX 600 index down 0.3% as technology and bank stocks struggled. The technology sub-index dropped around 1%, while euro zone banks slipped 1.3%.
Carlsberg Group experienced a significant decline, with its shares falling nearly 8% after British soft drinks maker Britvic rejected its $3.9 billion takeover bid, which Britvic claimed significantly undervalued their company.
European Markets Slide as Tech and Banks Decline; Carlsberg Plummets Post-Bid Rejection
Economic data released showed a slowdown in German business activity in June and a larger-than-expected contraction in France’s services sector. Broader euro zone business growth also decelerated sharply as demand fell for the first time since February, leading to a drop in government bond yields across Europe and a slight decrease in the euro against the dollar. Meanwhile, UK retail sales saw a sharp rebound in May, helping to mitigate some negative market sentiment. Global investors remained cautious, with overnight declines in the S&P 500 and Nasdaq adding to the risk-averse mood in European markets.
Despite the overall decline, the STOXX 600 was still poised for modest weekly gains. This comes after a turbulent week marked by a more than 2% drop last week, which was triggered by French President Emmanuel Macron’s call for a snap parliamentary election. Market analysts suggest that while there is a cautious recovery, volatility is expected to persist due to the ongoing political uncertainties in France, which continue to weigh on investor sentiment.
Economic data further contributed to the market’s negative tone, revealing a slowdown in German business activity for June and an unexpected contraction in France’s services sector. Additionally, the broader euro zone business growth slowed sharply as demand fell for the first time since February. This led to a decrease in government bond yields across Europe and a slight dip in the euro against the dollar, reflecting the region’s economic challenges.
In the UK, retail sales saw a notable rebound in May, jumping sharply after a revised 1.8% decline in April. However, this positive news did little to lift the overall market mood, with the FTSE 100 down 0.3%. Global investors remained cautious, influenced by the overnight declines in the S&P 500 and Nasdaq. The fading rally in U.S. tech giant Nvidia also added to the risk-averse sentiment, impacting European markets as well.
Despite mixed economic signals and ongoing political uncertainties, European markets remain on a cautious recovery path. However, the recent declines in tech and bank stocks, coupled with Carlsberg’s significant drop after its rejected takeover bid, highlight the fragile investor sentiment that could persist in the near term.
“We are gingerly recovering, but the volatility will remain with regards to the French elections going forward until the first date of the election,” said Axel Rudolph, senior market analyst at IG Group.
