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European shares fell over 1% on Friday, aligning with a global risk-off sentiment as investors digested a range of mixed corporate updates to gauge overall market direction.
Market Performance
The pan-European STOXX 600 index dropped 1.6% to a three-month low by 0718 GMT. Despite the sharp decline, the index is on track to record a modest 0.1% decline for the week.
Sector Analysis
All sub-sectors were in the red, with the technology and financial sectors experiencing the most significant declines of 3.7% and 2.6%, respectively. The broad sell-off was spurred by a weak reading of U.S. manufacturing activity on Thursday, which hit an eight-month low in July.
Defensive Stocks and Corporate News
In contrast to the overall market trend, a few defensive stocks, such as Unilever (LON: ULVR), were trading in positive territory.
- AXA: Shares of French insurer AXA rose by 1.1% following news that BNP Paribas (OTC: BNPQY) is in exclusive talks to acquire 100% of AXA Investment Managers for 5.1 billion euros ($5.50 billion).
- Engie: French energy company Engie gained 2.3% after lifting its profit guidance, citing first-half results that surpassed expectations.
Broader Market Context
The negative sentiment in European markets mirrored global trends, driven by disappointing economic data from the U.S. A weak reading on U.S. manufacturing activity highlighted concerns over an economic slowdown, leading to a broad risk-off move in global markets.
Conclusion
European shares are under pressure amid a global sell-off triggered by weak economic data and mixed corporate earnings. The technology and financial sectors have been hit the hardest, while defensive stocks like Unilever and companies with positive corporate news, such as AXA and Engie, managed to buck the trend. Investors remain cautious as they navigate through economic uncertainties and assess the implications of recent data and corporate developments.
