europe stock markets: Europe stares at recession; Russia appears to be on track beating predictions – The Economic Times

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Shares tumbled in London and across Europe as a jump in natural gas prices intensified the strain on the European economy, according to an article in The Guardian.

Possibilities of European recession hit stock markets on Tuesday as the euro dipped to a two-decade low and the pound fell to its lowest since the current pandemic.

Shares tumbled in London and across Europe as a jump in natural gas prices intensified the strain on the European economy, according to an article in The Guardian.

“The single currency fell by 1.5% to $1.025 against the US dollar, the lowest since late 2002. The pound dropped below the $1.20 mark to a two-year low of $1.19, the weakest point against the dollar since March 2020. Oil also tumbled to its lowest since mid-May as recession fears mounted, with Brent crude falling by more than 9% to below $103 a barrel, and US crude dropping through the $100-a-barrel mark,” according to The Guardian

Meanwhile Russia appears to be on track for a much shallower recession than was initially expected this year, Bloomberg reported on Wednesday, citing experts. Surging oil shipments have blunted the impact of US and EU sanctions, experts said.

According to the Bloomberg, economists from JPMorgan Chase, Citigroup, and other big banks are slashing their outlooks for the drop in output this year to as little as 3.5%. Russian officials, some of whom foresaw a contraction of as much as 12%, are now preparing to update their forecasts to less than half of that.

Seasonally adjusted data from the Development Center at Moscow’s Higher School of Economics showed industrial production in Russia was up 1.7% in May from the previous month. “The break in the contraction in May could be a sign that producers have initially adapted to the shock of anti-Russian sanctions,” the center said.

Economists pointed out that a rebound in oil production as a result of growing domestic demand and a shift to export buyers in Asia has been a big driver for the Russian economy. Gas output was another key economic engine, fueling revenue gains on spiking prices.

“We are not at the level of stress that we had assumed for 2022,” Rosbank economist Evgeny Koshelev told Bloomberg. “We should expect better trends because both budget and monetary policies are overall stimulative.”

According to The Guardian article Germany’s DAX index lost 3%, and France’s CAC fell 2.8%. “Investors are anxious that rate hikes by central banks desperate to tackle soaring inflation will push economies into recession. Further disruption to Russian energy supplies would also trigger a European downturn,” The Guardian reported quoting the analysts.

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