European stocks end worst year since 2018 — RT Business News

Major indices sold off on high inflation, geopolitical tensions and tighter monetary policy

Major European stock indices have struggled in 2022, with most posting their worst performance since before the Covid-19 pandemic, CNBC reported on Friday.

The pan-European Stoxx 600 index started the last trading day of the year down more than 12% from a year ago, its worst annual decline since a 13.24% plunge in 2018, according to the media.

France’s CAC 40 is on course to record a 12% fall over the year, while Germany’s DAX is on track to lose 18% in 2022, the worst performance in five years either way. The UK’s FTSE 100 did slightly better, but is still expected to lose 2% for the year.

Analysts attribute the poor performance to geopolitical turmoil this year, particularly the conflict in Ukraine and the ensuing sweeping sanctions against Russia by the West. The resulting global spike in food and energy prices pushed inflation in many countries to multi-decade highs, quickly triggering a large-scale cost of living crisis in Western countries. .

Meanwhile, measures taken globally to stem the surge in inflation, such as interest rate hikes, which many central banks have adopted this year, are seen by many as inadequate. Meanwhile, rising prices and rising borrowing costs have significantly affected industrial activity, prompting many economists to warn of an impending global recession.

China’s ongoing Covid-19 lockdowns, which were only recently lifted, have also contributed to uncertainty in stock markets.

Market experts say the weak appetite for riskier investments, such as equities, that has been seen for most of this year could remain in place in 2023.

« Investors enter 2023 with a cautious mindset, prepared for further rate hikes and expecting recessions around the world. And then there is China and its U-turn on Covid prevention. It’s been quite the shift from battling all cases to living with the virus and it’s creating huge uncertainty for the start of the year,Craig Erlam, senior market analyst at forex trading platform OANDA, told Bloomberg.

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