Interest rates

European stocks fall on rising concerns over rising interest rates

European stocks fell on Thursday amid growing concerns over the effect of rising interest rates on economic growth.

The continent-wide STOXX 600 index slid 0.8%, reversing much of the midweek gains. Technology, automakers and mining stocks were the biggest losers among the sectors.

The Iseq index in Dublin fell 0.9% to 6,912.74. Investors are betting on bigger rate hikes by the US Federal Reserve after figures released on Wednesday showed inflation in the world’s largest economy hit a higher than expected rate of 8.3% in April.

Policymakers at the European Central Bank have also been out in force in recent days, signaling that eurozone deposit rates are set to rise in July for the first time in a decade.

Dublin

FBD emerged as a weak spot, down 2.7% to €9.34, with the insurer highlighting the effect of financial market volatility in recent months on its investment portfolio as well as the specter of general inflation pushing up the cost of property and motor claims.

Cairn Homes was also in focus, down 0.2% to €1.04 as its chief executive, Michael Stanley, said impending interest rate hikes posed a challenge for families looking to buy their first home. . Rival Glenveagh Properties fell 1.7% to 97c.

Contrary to the trend, AIB rose 1.4% to €2.16, although its counterpart Bank of Ireland was in bad shape, falling 2.6% to €5.26, investors worried about its high exposure to the weakening UK economy.

London

London stocks fell as risk appetite waned after data showed Britain’s economy deteriorated in March, and persistent US inflation data heightened investor fears of aggressive rate hikes.

The blue-chip FTSE 100 closed down 1.6%, while the national mid-cap index slid 0.9%.

Oil majors BP and Shell fell 4.7% and 3.3%, respectively, while miners fell 3.9%, following lower commodity prices on demand concerns and fears of recession.

Data showed the UK economy unexpectedly shrank by 0.1% in March, but grew by 0.8% for the whole of the first quarter of 2022, in what was likely a high point for 2022 as the cost of living crisis bites deeper.

BT Group rose 1.0% after the broadband and mobile operator announced it had finalized the deal to combine its sports broadcasting unit with Discovery.

Shares of Rolls-Royce rose 1.1% as the engine maker said it traded in line with estimates in the first four months of the year.

Europe

Concerns over monetary policy tightening, China’s economic slowdown and soaring inflation fueled recession worries, pushing the Stoxx 600 down 6.7% so far in May, even as First quarter earnings were broadly supportive.

Adding to concerns, Russian gas flows to Europe via Ukraine fell by a quarter after kyiv stopped using a major transit route, the first time exports via Ukraine have been interrupted since the invasion.

Siemens fell 2.5% after announcing it would exit the Russian market due to the war in Ukraine, which hit its business 600 million euros in the second quarter.

French-Italian chipmaker STMicroelectronics gained 4% even as it forecast more than $20 billion (€19.3 billion) in annual sales by 2027 at the latest.

New York

Major Wall Street indexes were lower early in the afternoon, weighed down by fears that aggressive interest rate hikes to curb inflation, which has been high for decades, could tip the economy into recession. .

Traders are pricing in a 61% chance of a 0.75 percentage point Fed hike in June.

Investors fear that soaring inflation coupled with Fed policy measures, the war in Ukraine and the latest Covid-19 lockdowns in China could trigger a global economic slowdown.

Growth stocks Alphabet, Tesla, Microsoft, Apple and Nvidia were all in negative territory.

Consumer discretionary bucked the 0.9% uptrend as Kate Spade owner Tapestry climbed 15.1% on expectations of a recovery in demand in its key market of China. .

– Additional reports, Reuters