29. Januar 2023

European Stocks: Bearish Sentiment Continues As 2022 Closes

• European stocks are set to close 2022 on a bearish sentiment fueled by the ongoing Russia-Ukraine war, record high inflation, and tightening monetary policy.
• The STOXX Europe 600 Index Continuous Contract is down approximately 12 percent in the past twelve months.
• During the mid-London trading session, the FTSE 100 exchanged at 7,497.01, down approximately 0.21 percent.

The year 2022 has been a difficult one for European stocks, with the Kremlin’s indefinite oil cut-off to Eurozone countries and other macroeconomic factors creating a bearish sentiment across the region. As global markets prepare to close trading later today, investors are left to ponder the future outlook for European stocks.

The ongoing Russia-Ukraine war has been a major contributing factor to the bearish sentiment in the Eurozone this year. The conflict has caused rising geopolitical tensions and has weighed heavily on investor confidence. Additionally, record high inflation has reduced consumer spending power and has led to tighter monetary policy from the European Central Bank (ECB). This tightening of monetary policy has, in turn, caused the Euro to US dollar derivative to fall below the ratio of 1 for the first time since the 2008 financial crisis in 2022.

These macroeconomic factors have been compounded by the poor performance of global stocks throughout the year, with cryptocurrencies and big tech companies from the United States falling significantly over the past twelve months. The STOXX Europe 600 Index Continuous Contract is down approximately 12 percent in the past twelve months, while the FTSE 100 exchanged at 7,497.01, down approximately 0.21 percent during the mid-London trading session.

The outlook for European stocks in 2023 remains uncertain, with investors’ hopes of a recovery for the region being held back by the ongoing geopolitical tensions and macroeconomic headwinds. With the ECB’s monetary policy continuing to be restrictive, it may be some time before European stocks can recover from the bearish sentiment of 2022.