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European Markets Close Lower as Investors Digest Gloomy German Data

Reuters

European markets closed lower Friday, tracking global uncertainty as investors chart the course for monetary policy and continue to digest corporate earnings reports.

The pan-European Stoxx 600 provisionally ended 0.8% lower, with travel and leisure stocks leading losses, down 3%. Health care stocks, meanwhile, added 0.7%.

Investor sentiment has been tepid since mid-week after minutes from the Federal Reserve's July meeting showed policymakers would not consider pulling back on interest rate hikes until inflation came down substantially, despite a slight slowing in inflation that had offered some hope for a less aggressive tightening path.

On the data front, European investors were digesting July's U.K. retail sales and German producer prices on Friday.

Markets in Asia-Pacific were mixed on Friday, taking their cues from a muted Wall Street. Stocks slipped lower stateside as the summer rally appeared to falter, with the S&P 500 and Nasdaq Composite on pace to end the week on a sour note.

Cineworld shares plunge 60%

Cineworld, which operates 9,000 theatres in 10 countries, has warned that a lack of blockbusters is hurting admissions.
Geography Photos | Universal Images Group | Getty Images
Cineworld, which operates 9,000 theatres in 10 countries, has warned that a lack of blockbusters is hurting admissions.

British cinema chain Cineworld Group saw shares plunge Friday on reports that it is preparing to file for bankruptcy after failing to entice viewers back to movie theatres following a pandemic lull.

The stock was down around 67% in mid-afternoon trade in London.

It comes after reports first cited in The Wall Street Journal that the company, which owns Regal Cinemas, has engaged a team of lawyers and consultants to advise on the bankruptcy process.

Cineworld is the latest casualty of the movie theater industry, which has struggled to regain its footing following coronavirus pandemic lockdowns, with viewers increasingly inclined to stream movie releases at home.

— Karen Gilchrist

U.S. stocks open lower

U.S. stocks opened lower Friday, with the S&P 500 on pace to break its four-week win streak.

In early trade, the S&P fell 0.7%, while the Dow Jones Industrial Average dipped 0.5%. The Nasdaq was down1.2%.

No major economic reports were due out Friday.

— Karen Gilchrist

Sterling bordering on emerging market currency behaviour, says Saxo Bank strategist

Sterling is exhibiting behaviours of an emerging market currency amid the dire cost of living crisis, says John Hardy, senior FX strategy at Saxo Bank.

German producer prices skyrocket

German producer prices saw their highest jump on record, according to official data out Friday.

"The outlook for the further development [of the economy] is currently noticeably gloomy," the ministry said in its report. Read the full story here.

The German economy, Europe's largest, stagnated in the second quarter.
Andreas Rentz / Staff / Getty Images
The German economy, Europe's largest, stagnated in the second quarter.

—Matt Clinch

Schroders: UK retail figures 'very strong' despite double-digit inflation

Azad Zangana, senior European economist at Schroders, discusses this morning's U.K. retail figures and inflation, providing an outlook for consumer sentiment and consumer spending over the next 12 months.

UK consumer confidence tanks

New data released before the opening bell Friday showed that U.K. consumer confidence hit a new record low of -44 in August. Research firm GfK said its consumer confidence index fell by 3 points compared to the month before.

"The Overall Index Score dropped three points in August to -44, the lowest since records began in 1974. All measures fell, reflecting acute concerns as the cost-of-living soars. A sense of exasperation about the UK's economy is the biggest driver of these findings," Joe Staton, client strategy director at GfK, said.

—Matt Clinch

UK retail sales rise in July

British shoppers saw a slight boost in July with official figures Friday showing a 0.3% rise for retail sales.

"Sales volumes were 2.3% above their pre-coronavirus (COVID-19) February 2020 levels, but down over the past year," the ONS added in its release.

People seen dining outdoors in Soho in London in September 2021. Since Covid restrictions were lifted in the U.K., people have flocked back to streets, shops and public spaces.
SOPA Images | LightRocket | Getty Images
People seen dining outdoors in Soho in London in September 2021. Since Covid restrictions were lifted in the U.K., people have flocked back to streets, shops and public spaces.

—Matt Clinch

Sodexo shares dip

Shares of French food services company Sodexo were down 2% in early deals. Broker Jefferies released a new note Friday morning where it cut the stock to a "hold" from a "buy," also slashing its price target to 88 euros form 91 euros.

—Matt Clinch

CNBC Pro: Veteran strategist David Roche shares his views on the market rally

U.S. markets have picked up from their mid-June lows in recent weeks, but strategist David Roche believes current support for the market is set to run out.

Speaking to CNBC earlier this week, Roche, head of research firm Independent Strategy, said he thought the rally was "probably 75% over now."

Pro subscribers can read more here.

— Jenni Reid

CNBC Pro: Investment pro says 'don't be a hero' in markets

Market veteran Nancy Tengler says talk of a new bull market is premature, as she names the "reliable" stocks she likes right now.

"I think this rally has been excellent," Tengler, who is CEO and chief investment officer of Laffer Tengler Investments, told CNBC "Squawk Box Asia" last week. "But I don't think we're off and running in a new bull market."

She named several tech stocks that she thinks are "more reliable growers" — companies with a proven track record of growing earnings and dividends.

Pro subscribers can read the story here.

— Zavier Ong

Here are the opening calls

Britain's FTSE 100 is seen around 13 points lower at 7,529, Germany's DAX is expected to slide around 20 points to 13,677 and France's CAC 40 is set to slip by around 46 points to 6,511.

—Elliot Smith

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