The DAX chart of the German stock price index is pictured on the stock exchange in Frankfurt, Germany, July 25, 2022. REUTERS/Staff

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  • EU ministers agree to urgently reduce gas consumption
  • Retailers hit by Walmart’s profit warning
  • UBS slips to March 2022 low on shortfall

July 26 (Reuters) – European stocks fell on Tuesday, with those of Germany and Italy leading declines in major eurozone stock markets as European Union countries approved a weakened contingency plan to curb their demand for gas, while retail stocks fell after Walmart’s profit warning.

The move comes after Russia’s Gazprom (GAZP.MM) said it would cut flows through the Nord Stream 1 gas pipeline to Germany to a fifth of its capacity, seen as a retaliatory measure against Western sanctions over the Russia’s war with Ukraine. Read more

Energy ministers approved a proposal asking all EU countries to voluntarily reduce their gas consumption by 15% from August to March with compromise agreements to reduce cuts for some countries.

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“Europe is clearly preparing for the occasion when it is completely cut off from Russian gas,” said Teeuwe Mevissen, senior market economist at Rabobank.

The move rippled through all assets, with eurozone bond yields falling and the euro falling 1%.

The IMF cut its 2022 eurozone growth outlook to 2.6% from 2.8% in April, reflecting the inflationary fallout from the war in Ukraine, with Germany seeing its 2022 growth outlook cut to 1 .2% vs. previous forecast of 2.1%. Read more

Credit Suisse also lowered its 2022 inflation-adjusted economic growth forecast for the euro zone to 2.3% from 2.4%, expecting the sharpest contractions in Germany and Italy.

“Even if rationing is avoided, soaring gas prices due to supply uncertainty will further depress activity,” said Veronika Roharova, European economist at Credit Suisse.

Monday’s data showed Europe’s largest economy, Germany, was likely on the brink of a recession. Read more

German stocks (.GDAXI) fell 17.6% on the year, underperforming a broader pan-European STOXX 600 index (.STOXX) which is down 12.6%. Italian stocks (.FTMIB) lost more than 20% as a domestic political crisis added to the woes.

Investors also braced for a likely 75 basis point interest rate hike by the US Federal Reserve on Wednesday.

Concerns about tighter monetary policy hitting economic growth and fears of an energy supply crisis have seen the STOXX 600 post losses in five of the past six months.

That day, the STOXX 600 was flat. A rally in defensive sectors such as healthcare (.SXDP), food and beverages (.SX3P) and a 2.9% jump at Unilever (ULVR.L) after positive results, were offset by a lower at retailers and Swiss bank UBS (UBSG.S) following a shortfall. Read more

Retail shares (.SXRP) fell 4.2% to record their worst day in nearly four months, hit by a profit warning from major U.S. retailer Walmart Inc (WMT.N), which cited soaring food and fuel prices affecting discretionary demand. Read more

However, Lindt & Spruengli (LISN.S) gained 5.7% after the Swiss chocolate maker raised its 2022 sales forecast and unveiled a 1 billion Swiss franc ($1.04 billion) share buyback program. of dollars). Read more

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Reporting by Susan Mathew and Devik Jain in Bengaluru; Editing by Shounak Dasgupta and Shailesh Kuber

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