Wealth Manager - the site for professional investment managers

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and only takes a minute.

FTSE under pressure as eurozone slumps back into recession

FTSE under pressure as eurozone slumps back into recession

Despite France and Germany growing in the third quarter the eurozone is now in its second recession since the financial crisis began.

National growth data for quarter three showed that even though France and Germany's economies expanded by 0.2%, the single currency bloc could not skirt a fully blown slump.

The eurozone contracted by 0.1% in the last three months, following its 0.2% contraction in quarter two.

Even before the official data was unveiled economists warned the eurozone could not escape the gloom, with Capital Economics' weighted average of the available data predicting the 0.1% contraction.

Although the expansions in France and Germany came as a positive surprise, these were not enough to ease the overall squeeze on Europe, sending the FTSE 100 down as traders digested the data.

At shortly after 10am the index was down 0.39% at 5,699.

Figures for the individual eurozone constituents are still coming through, though initial data suggest that while consumer spending edged up overall in the eurozone in the third quarter, investment was very weak.

Howard Archer, of IHS Global Insight, said that if it had not been for net trade holding up well, the contraction would have been deeper.

Looking forward, chief European economist Archer said the prospects for the single currency zone in the fourth quarter look bleak, spelling a likely cut in eurozone interest rates.

'With the eurozone seemingly headed for further GDP contraction in the fourth quarter after moving officially into recession in the third quarter, and with the underlying inflation situation in the single currency area looking far from alarming, we believe the ECB will take interest rates down from 0.75% to 0.50% sooner rather than later,' he said.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Carl Harald Janson: why biotech is on a 20-year bull run

Carl Harald Janson: why biotech is on a 20-year bull run

The manager of the International Biotechnology Trust explains why his confident about the sector's long term prospects.

Brewin's Gutteridge: the opportunities in UK challenger banks

Brewin's Gutteridge: the opportunities in UK challenger banks

In this week's podcast, Brewin Dolphin's Ben Gutteridge and Guy Foster, discuss opportunities in the global financials sector with Aptus' Johnny De La Hey.

Play How BlackRock Income Strategies is positioning for a crash

How BlackRock Income Strategies is positioning for a crash

Adam Ryan keeps his powder dry as he positions the BlackRock Income Strategies investment trust for a market correction. 

Your Business: Cover Star Club

Profile: how Close Brothers gave power back to the regions

Profile: how Close Brothers gave power back to the regions

Almost a year into the role, Close Brothers Asset Management head of wealth management Andy Cumming has highlighted three keys areas of focus

Wealth Manager on Twitter