Europe chemicals stocks sharply down on recession fears

MADRID (ICIS)–European chemicals stock prices were falling sharply in Wednesday afternoon trading as investors in the region caught up with fears that the US economy may be heading into a recession.

German chemicals major BASF, with a large global exposure, was down more than 5%, compared to the close on Tuesday, by 14:15 CEST.

Other large German chemicals companies were also losing value on Wednesday, including Covestro (-4.49%), LANXESS (-4.78%), Brenntag (-4.02%).

France’s Arkema (-3.50%), Belgium’s Solvay (-3.60%) or the Netherlands’ AkzoNobel (-3.25) were also taking a battering.

Chemicals stocks were falling more than the average stock exchanges in Europe, which were all posting falls of around 2%.

The fall in European stocks follows those in Asian markets; Hong Kong’s Hang Seng index lost on Wednesday 2.56% of its value, while the Shanghai Composite lost 1.12%.

Crude oil prices also fell sharply on Wednesday on recession fears and after the US Government was reported to be considering a temporary halt to Federal taxes on gasoline in order to alleviate pressure on car users.

Late on Tuesday, US banking major Goldman Sachs said the likelihood of a recession in the US within 12 months was at 30%, up from the 15% likelihood it foresaw before.

The sharp falls on Wednesday in Europe come after a sharp rebound in US stocks on Tuesday. US stocks were still trading up on Wednesday.

“Whilst the question of whether we are about to face a recession is still dominating markets, risk assets posted a sharp rebound yesterday as the US got back from holiday [Juneteenth public holiday on 20 June],” said London-based equity analysts at Deutsche Bank.

“Before you think it’s safe to come out from behind the sofa, S&P futures are around -1% lower this morning as the recession narrative makes a bit of a comeback. European futures are indicating that yesterday’s [Tuesday] gains will be eradicated which could end a three-day winning streak … The demand destruction narrative is making a comeback in Asia as well.”

Front page picture: Sign of Germany’s Deutsche Borse
Source: Xinhua/Shutterstock