European slide towards recession puts euro at 20-year low

business
European Slide Towards Recession Puts Euro At 20-Year Low European Slide Towards Recession Puts Euro At 20-Year Low
The euro, now trading at $0.99 versus the dollar, is expected to fall further. Photo: Daniel Munoz/AFP via Getty Images
Share this article

By Huw Jones, Reuters

Contraction in the euro zone economy for a second straight month pinned the single currency to a 20-year low against the dollar on Tuesday, with surging gas prices adding to misery dragging Europe towards recession.

While the S&P flash composite Purchasing Managers' Index (PMI) of business activity in Europe was not as bad as feared, analysts said more grim news for the economy is likely given how gas prices have surged to record highs ahead of winter.

The Stoxx index of European company shares shed 0.4 per cent on Tuesday, having fallen for nearly a week. It is now about 11 per cent off its record high of January 4th as war in Ukraine pushed up inflation and triggered rises in central bank interest rates to cast a pall over growth.

Advertisement

Benchmark gas prices in the European Union surged 13 per cent overnight to a record peak, having doubled in just a month to be 14 times higher than the average of the past decade.

Europe was braced for fresh disruption in energy supplies from Russia.

"I can't see the Ukraine war coming to an end anytime soon, that would be the catalyst for a market rally. That is going to keep pressure on energy prices and as for the euro, the only way is down," said Michael Hewson, chief markets at CMC Markets.

The euro, now trading at $0.9920 versus the dollar, is expected to fall further to $0.9600 by December given Europe's poorer outlook, said Monica Defend, head of the Amundi Institute, an asset management advisory group.

"The US and the euro area are on two different tracks," she said.

Read More

Want us to email you top stories each lunch time?

Download our Apps
© BreakingNews.ie 2022, developed by Square1 and powered by PublisherPlus.com