What Is Causing European Stocks’ Considerable Crash?

Thursday saw a dramatic decline in European stock markets as investors grew concerned about the interaction of tighter monetary policy and weakening global growth.

By 4:00 ET (08:00 GMT), the CAC 40 in France was down 1.3%, the DAX in Germany was down 1.1%, and the FTSE 100 in the United Kingdom was down 1%. German retail sales increased 1.9% in real terms in July, exceeding experts’ estimates for a 0.4% decline and exceeding their highest increase in six months, according to data released earlier on Thursday. Sales decreased 2.6% from 9.6% in June when compared year over year, exceeding forecasts.

This might, however, be the result of a COVID-free summer travel season and a lone bright light as German manufacturing activity, a key generator of development in the Eurozone, continued to decline in August. To battle inflation at record levels, the Federal Reserve, the Bank of England, and the European Central Bank plan to continue raising interest rates.

Out of Control Inflation in Eurozone

Inflation in the Eurozone reached a new record high in August, jumping to 9.1% on an annual basis, according to data released on Wednesday. The European Central Bank was urged on Wednesday by the president of the German central bank to act “decisively” to reduce inflation, and a rise of 75 basis points at the policy meeting next week is now highly expected.

Chinese manufacturing production decreased in August, according to data from a private poll issued earlier in Asia, as COVID lockdowns and an energy shortage brought on by the drought weighed on industrial activity in the world’s second-largest economy and a key engine of regional development.

In business-related news, Reckitt Benckiser’s (LON: RKT) stock dropped 4.8% after it was revealed that CEO Laxman Narasimhan would leave at the end of the month to take up a new opportunity in the United States. The price of Rio Tinto’s (LON: RIO) stock dropped 2.7% after the miner decided to pay $3.3 billion to acquire Turquoise Hill Resources (TSX: TRQ). The agreement, which Rio currently controls 51% of, puts an end to acquisition negotiations that lasted over six months and comes just two weeks after Turquoise Hill rejected a cheaper bid.