On Friday, there was a drop in European shares with Germany leading the decline, as investors were worried about the downbeat consumer sentiment numbers recorded in the biggest economy of the continent.
Meanwhile, fears were worsened by the hawkish comments put forward by the chief of the US Federal Reserve, Jerome Powell, when he delivered his speech on Friday in Jackson Hole, Wyoming.
The continent-wide STOXX 600 index declined 1.7%, which brought it down for the week by 2.6%. There was also a 2.3% drop in the DAX index in Germany, with its weekly decline reaching 4.2%.
This makes it the worst performance of the German index in over two months. According to a new survey, consumer sentiment in Germany is set to reach a record low for the third consecutive month.
Households in Germany were preparing for a rise in their energy bills. Meanwhile, there was an unexpected rise in consumer confidence in France in August.
Market analysts said that the recession fears in Germany had just gotten worse, as the sentiment index had dropped to a record low.
This is because the economy is the most reliant on external energy producers and people are saving the most they have done in 11 years, showing that they are prepared for the worst-case scenario.
To make matters worse, the comments from Jerome Powell did not offer markets any respite, as he stated that the US economy would have to tolerate more tightening in the future.
He said that they would continue to tighten and hold for some time, until they see some improvement in terms of inflation. This means growth will slow down and jobs will drop, leading to pain for people and businesses.
Market analysts said that it did not take even nine minutes for the US Fed chairman to jawbone the market, as he reiterated their commitment to battle inflation.
He immediately threw cold water on the hopes of the market to see a slowdown from the Fed.
After his comments, there was a further rise recorded in Euro zone bond yields. The bloc had already seen borrowing costs rise after a report that the European Central Bank would consider a 75bps rate hike.
There was a decline of about 3.5% each in the travel, leisure and retail sectors, which was the highest amongst all in Europe.
There was a 0.3% drop in Carlsberg after the Danish brewery said that its Poland subsidiary could halt or cut production because of a lack of deliveries of carbon dioxide.
There was also a 2.0% drop in the Salzgitter Maschinenbau Group in Germany, after the announcement that its Singapore unit would be purchased by Dymon Asia, a private equity firm.
There was also a twofold increase in the shares of Micro Focus in Britain after OpenText from Canada agreed to purchase the enterprise software maker for $6 billion, which would be an all-cash deal.