Yahoo Finance European stocks fall after stark Bank of England forecast
European stocks fell on Thursday after the Bank of England predicted that the UK economy would suffer its largest contraction in a century this year.
Though the bank held both its benchmark interest rate and the size of its bond-buying programme steady, it warned that the UK’s economic output would shrink by 9.5% this year and stay below its pre-pandemic levels until at least the end of 2021.
The pan-European STOXX 600 index (^STOXX) fell by around 0.4%, while London’s FTSE 100 (^FTSE) was 1.3% in the red.
Stocks in the UK were dealt a second blow by a series of weak company results, including from Glencore (GLEN.L) and ITV (ITV.L).
READ MORE: UK economy to have biggest annual decline in 100 years
Germany’s DAX (^GDAXI) declined marginally, while France’s CAC 40 (^FCHI) fell by more than 0.5%. Stocks fell by around 0.8% on Italy’s FTSE MIB (FTSEMIB.MI), as did shares on Spain’s IBEX (^IBEX).
“It was a tough morning for the FTSE 100, dealt blows from the Bank of England and some of Thursday’s reporting companies,” said Connor Campbell, a financial analyst at trading platform Spreadex.
“Keeping interest rates at a record low 0.1%, the Andrew Bailey-led central bank warned that the UK economy shrank by 20% in the second quarter,” he said.
Stocks in Asia had a similarly mixed trading session.
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Shanghai’s SSE Composite Index (^SSEC) rose by 0.26% on Thursday, while the Hang Seng (^HSI) closed more than 0.8% in the red in Hong Kong.
Japan’s Nikkei (^N225) fell by 0.4%, while the KOSPI Composite Index (^KOSPI) in South Korea climbed by around 1.3%. Australia’s ASX 200 (^AXJO) rose by almost 0.7%.
Futures were pointing to a slightly higher open for stocks in the US, even as a dispute about funding for the United States Postal Service raised the prospect of a further delay to lawmakers agreeing on new stimulus measures.
Futures on the S&P 500 (ES=F) rose by around 0.1%. Dow Jones Industrial Average futures (YM=F) climbed by around 0.2%. Nasdaq futures (NQ=F), meanwhile, were up by marginally.
