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Major European stocks declined on Friday to 16-month lows on track for the largest monthly loss in two years. 


The decline in European stocks triggered questions about the path forward for European stocks.


We here expect European stocks to mark even more losses due to the ongoing Ukrainian crisis, while the ECB prepares to hike interest rates, and amid political concerns in France.


Dow Jones Stoxx Europe


Dow Jones Stoxx Europe slid to 401.92 on Friday, the lowest since February 2021, while losing nearly 8.5% in June, on track for the third monthly loss in a row, and the largest since May 2020.




The Ukrainian crisis obviously hit growth prospects in Europe, with the economy expected to sustain more losses as time goes by.




The ECB maintained rates at the June 9 meeting at zero, while announcing plans to end monetary easing programs by the first of July, and hike rates by 25 basis points.




ECB President Christine Lagarde is testifying ahead of the European Parliament later today, expected to offer clues on the future of interest rates and European policies. 


Now markets expect the ECB to hike rates by 25 basis points in July, and another 25 basis points in September to control inflation. 


Markets expect a total of 1.25% hike of rates in Europe in the next four policy meetings for the ECB.




In France, President Emanuel Macron's party failed to acquire absolute majority in Parliament, triggering concerns about his ability to pass his economic programs.


Such developments will no doubt impact economic reform plans intended by Macron.

European Market News