European markets reversed course Wednesday afternoon following a decline in regional economic sentiment for December, as indicated by preliminary data.
The pan-European Stoxx 600 index, which had been up 0.5% earlier in the day, shifted into negative territory after midday. Most sectors saw losses, with only healthcare and financial services managing to remain in positive territory.
The market downturn followed the European Commission’s release of preliminary data showing a decline in its economic sentiment indicator for December. The indicator dropped by 1.7 points in the EU and 1.9 points in the eurozone, with both figures remaining below their long-term averages, signaling sustained economic concerns.
Compounding the gloomy outlook, Germany reported a surprising dip in industrial orders for November, further fueling worries about the region’s economic momentum.
Consumer confidence in both the EU and the eurozone also weakened for the second consecutive month, underscoring growing caution among households amid persistent inflationary pressures and economic uncertainty.
Shell Faces Downward Revision, Investor Concerns
Adding to the negative sentiment, shares of Shell fell 2.2% after the British energy giant downgraded its liquefied natural gas (LNG) production forecast for the fourth quarter of 2024.
Shell revised its LNG production forecast for the final quarter of 2024, lowering it to a range of 6.8 to 7.2 million metric tons, down from the previous estimate of 6.9 to 7.5 million metric tons. The company also issued a warning that trading results for its chemicals and oil products division would be “significantly lower” compared to the previous quarter, raising concerns about its short-term earnings outlook.
Further complicating its financial outlook, Shell expects to incur non-cash post-tax impairments between $1.5 billion and $3 billion for the fourth quarter. In addition, the company is facing a $1.3 billion charge linked to the timing of payments for emissions certificates, primarily affecting permits in Germany and the U.S. These adjustments have raised concerns over Shell’s short-term performance, dampening investor sentiment.
