European stock markets fall as a rally in oil prices fizzle and China worries continue. As Sara Hemrajani reports, even mighty Germany is feeling the impact of the slowdown with business morale in January falling more than expected.
(Reuters) – A new week begins but old worries have resurfaced.
Europe’s early market rally – which followed one in Asia – soon faded with major indices slipping back into the red.
The oil price slump – a 3 percent drop today – is once again weighing on investors.
And there are lingering concerns about the impact of China’s cooling economy on global growth.
But now there’s another issue denting confidence: weakening business morale in Germany.
The Ifo institute’s business climate index fell to an 11-month low in January – a signal that company executives in Europe’s powerhouse are feeling anxious about their prospects.
With these factors at play, some analysts say market turbulence is the ‘new normal’ for 2016.
Matthew Beesley is from Henderson Global Investors.
Henderson Global Investors, Head of Global Equities, Matthew Beesley
“We’re very much worried about a negative feedback loop brewing between stock markets and economics. The risk is from here is that markets start leading economics. That the falls in equity markets globally start denting corporate confidence, and that then leads to slowing reinvestment of cash flow, low expectations for growth. So the negative feedback loop can indeed take hold.”
But there’s an unlikely bright spot on the continent – Greece.
Stocks in Athens rose the most among western-European markets.
That’s after Standard & Poor’s upgraded Greece’s rating late on Friday to B- with a stable outlook.
S&P says the country is no longer vulnerable to default.