Europe had its worst stock market year since the financial crisis

Industrialists are talking about irreversible damage to European industry, while European energy ministers will not meet until Friday. The division between a bleeding economy and Europe taking its time exacerbates the malaise. All European indices from 1 to 2 percent are in the red. Bel20 is, along with the French and Dutch stock exchanges, among the strongest losers.

Stock markets immediately plunged into the red since the opening due to the sharp rise in gas prices. In Brussels, industrial and financial stocks in particular fell. Solvay and Abram were among the biggest losers. Its industrial facilities are particularly energy-intensive, which increases their costs. Aperam previously closed its stainless steel plant in Genk.

Elsewhere in Europe, prices for other chemical products such as Basf are also under pressure. Parts of the petrochemical industry in particular are under stress. Antwerp has the second largest petrochemical center in the world.

Exorbitant production costs also coincide with lower demand and order books under pressure. Europe’s problem is that the energy shock is too limited in other parts of the world. There is a risk that some companies will move.

higher interest

On the other hand, financial stocks are falling again for fear of an economic downturn. Recession leads to more defaults. In Brussels, this mainly puts pressure on the KBC group, which has an important second domestic market in Central Europe. Growth stocks are also under pressure. D’Ieteren’s fall in the stock market was remarkable. The majority of D’Ieteren’s earnings come from Belron, known as the Carglass Company.

The decision to be made by the European Central Bank on Thursday is overshadowed by the energy crisis. The European Central Bank is expected to raise interest rates by 0.50 or even 0.75 basis points. Some economists expect the European deposit rate to reach 1.50 to 1.80 points by the end of this year. This is while recession is expected to appear mainly in the fourth quarter and 2023 will also be a lost year for the European economy.

In Bel20 there is an index of the top 20 stocks, not a single arrow is in the plus sign. Since the beginning of the year, Bel20 is down about 17.5 percent. It’s a painful awakening, especially for investors who rediscovered the stock market so late after years of barely receiving interest on their savings.

The euro stoxx 600, the index of the most important 600 companies, has traded up 16 percent in the red since the beginning of the year. This is the largest drop since 2008, when the financial crisis led to the collapse of the banking system.

Not only did European stocks lose steam, but the Euro also remained under pressure at $0.99. It is the first time in two decades that the Euro is very weak against the Dollar. In theory, a weak euro is good for exports, but today it essentially makes imports more expensive, so it puts more pressure on the inflation problem.