European markets were lower on Wednesday, following a loss in the previous session, despite data showing improved business sentiment in Germany and an uptick in eurozone services and manufacturing activity.
The pan-European Stoxx 600 index was down 0.6% in mid-afternoon trade and most sectors slid into negative territory, with media and tech down 1.4%.
Europe appeared to be taking cues from the U.S. as it enters corporate earnings season, where markets were mixed on Tuesday and futures were lower Wednesday.
A widely watched gauge of German business sentiment from the Munich-based Ifo Institute showed “considerably less pessimistic expectations” in January.
President of the Ifo, Clemens Fuest, told CNBC that while Germany’s economy may slow in the first quarter, it was unlikely to enter a technical recession, given brighter sentiment.
Meanwhile, S&P Global eurozone composite purchasing managers’ index came in at 50.2 in January, up from 49.3 in December and ahead of a consensus forecast of 49.8. The 50 mark separates expansion from contraction.
U.S. stocks fell on Wednesday after the latest batch of corporate earnings intensified concerns over how some of the largest U.S. companies are faring as rates rise and recession fears grow.
Asia-Pacific shares were mixed, with Japan and South Korean markets rising as Australia dipped. Markets in Hong Kong and mainland China closed for the Lunar New Year.
Read More: European markets lower despite improved German sentiment, positive PMIs