Immediately after the global financial crisis, the sovereign debt crisis hit Europe. Next came the Grexit concerns in 2015. In 2016, the United Kingdom voted to leave the European Union. Last year, we saw a crisis over Italy’s budget deficit. This year, uncertainty over Brexit has hurt business sentiment in the region.
Plus, automotive sales have been weak globally, hurting the German economy (EWG). Global trade has also been affected by President Trump’s trade war, which is further affecting the German economy.
China’s slowdown is also taking a toll on Europe’s economy as the country’s imports have slumped in recent months. China’s imports in US dollar terms fell 5.2% year-over-year in February. Imports had fallen in January as well. For its part, the ECB (European Central Bank) is taking measures to arrest the slowdown. At the beginning of March, the ECB said, “The Governing Council now expects the key ECB interest rates to remain at their present levels at least through the end of 2019.” The current language is more dovish than last year, when the ECB said rates would be on hold “at least through the summer of 2019.”
But the ECB and central banks across the globe might fall short of their policy tools if a recession hits the global economy. See Economic Slowdown Deepens, Central Banks Take Charge for more analysis.
In the markets (QQQ), the FAANG pack is deep in the red today. As of 1:00 PM ET, Facebook (FB), Apple (AAPL), Amazon (AMZN), Netflix (NFLX), and Alphabet (GOOG) have respectively lost 0.39%, 1.1%, 1.9%, 3.0%, and 1.5%. Alibaba (BABA), Baidu (BIDU), and Micron (MU) have also lost 2.3%, 2.6%, and 3.9%. respectively.
On March 22, at 11:48 AM EDT, US crude oil May futures fell 2.2% from their previous close. Concerns surrounding a slowdown in Europe's powerhouse have dragged US crude oil prices near the lower limit of our price forecast.
Today, IHS Markit published its purchasing managers' indexes or PMIs for May countries around the world.
Best Buy (BBY) reported better-than-expected earnings for the first quarter of fiscal 2020, which ended on May 4.
On May 23 at 12:46 PM EDT, Apple (AAPL) was trading at $179.12 with a 2.0% loss for the day.
The CBOE Volatility Index has been sitting at very low levels for most of 2019.
On May 23, CannTrust (CTST) was trading nearly 4.1% lower, while Cronos Group (CRON) fell 3.3%.
US equity markets are in the red today amid the escalation in the US-China trade war.