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German recession fears reignited as car production slumps
Fears Europe’s largest economy is headed for recession were stoked on Friday morning as data showed German car production slumped last month.
According to federal statistics agency Destatis, output from Germany’s automotive industry fell by 8.1% between June and July.
This weighed on overall industrial output, which declined by 2.4% in the meantime.
“The big drop [...] adds to the sense that the sector is facing a deep crisis,” Capital Economics economist Franziska Palmas commented.
“Having contracted in the second quarter, the German economy may fall back into a technical recession in the third quarter.”
Separate data from Eurostat on Friday also showed estimated Eurozone gross domestic product for the second quarter had been scaled back, in part driven by a decline from the German economy.
Eurozone growth between April and June was said to have sat at 0.2% against the first quarter, compared to a previous estimate of 0.3%.
Endeavour tops risers as gold gains ahead of US job figures
Endeavour Mining PLC (LON:EDV) gained on Friday morning as traders bet a poor read in US job figures later in the day would quicken the pace of US rate cuts and buoy gold prices.
Shares in the gold-focussed miner ticked up 1.9% early on to top the FTSE 100’s risers.
This was as gold prices remained elevated at US$2,520 per ounce on Friday morning ahead of the US non-farm payroll figures, having risen 0.2%.
Expectations are for 160,000 jobs to have been added to the US economy in August, with a miss in last month’s reading sending global markets into freefall.
This was as the weaker data prompted fears over recession in the world’s largest economy, on concerns the Federal Reserve had held interest rates high for too long.
Pointing to futures showing a negative start for Wall Street on Friday, alongside the uptick in gold prices, AJ Bell (LON:AJBA) analyst Russ Mould noted investors were “extremely nervous”.
“The Federal Reserve looks hard at employment trends when it decides on interest rates,” he added, with any surprises in Friday’s data threatening to change the course of cuts, which are expected from this month.
Shell, BP dragged lower as oil set for worst week in a year
Shell PLC (LON:SHEL) and BP (LON:BP) PLC shares fell on Friday as oil prices appeared to head towards their largest weekly decline in almost a year.
At US$72.65 a barrel on Friday morning, Brent crude had fallen more than 8% over the course of the week, white West Texas Intermediate was down 9% at US$69.17.
This was in spite of news the OPEC+ cartel would delay a planned increase in production from October to December.
Fears over a supply surplus into next year have emerged recently, with the fall also coming despite data from the US showing crude inventories had dropped to their lowest level in roughly a year last week.
Easing political tensions in Libya, which had seen exports slashed, prompted prices to fall heavily earlier in the week.
Shell fell 1.4% on Friday, while BP dipped 0.9%.
Primark owner falls further as DB cuts targets
Primark owner Associated British Foods PLC (LON:ABF) fell further on Friday morning after Deutsche Bank (ETR:DBKGn) analysts wound down expectations for the firm.
ABF’s update on Thursday showed Primark sales had fallen on a like-for-like basis over the first half of the year and profits from its sugar business were lower than expected.
“Investors were already cautious on the weak Primark [...] performance but this remains the main ongoing cause for investor uncertainty on the stock,” Deutsche said in a note.
A ‘sell’ rating was reiterated as a result, with Deutsche also winding down pre-tax earnings forecasts for the coming three years.
The bank’s share price target for ABF was cut too, from 2,190p to 2,130p.
“We need to see more evidence of a recovery in Primark like-for-like, otherwise we believe they will need to invest more into the brand to deliver a sales uplift,” Deutsche added.
Shares fell 1.9% to 2,245p on Friday, following a drop on Thursday.
European stocks in red as markets brace for US job figures
Markets across Europe were in the red on Friday morning ahead of US non-farm payroll figures.
Poor data this time last month had sent global markets into freefall, with a recovery only fully coming towards the end of August.
This was as lower-than-expected figures prompted fears that the Federal Reserve had held high interest rates for too long and threatened the US economy with recession as a result.
Some better data since has appeared to ease such concerns, with expectations now widely for a rate cut by the central bank this month.
Private payroll data most recently on Thursday showed the weakest growth in three years though, while separate figures saw unemployment claims fall, painting a mixed picture.
“There is extra emphasis [...] on today’s employment report” as a result, interactive investor analyst Richard Hunter noted.
“[This] will walk the fine line between whether the fabled soft landing is on track, or whether the Federal Reserve has missed the boat with a potential recession in sight.”
Expectations are for 160,000 jobs to have been added to the US economy in August, with the report due at 1.30pm UK time.