The Business Times

Europe: Shares slip with US inflation data in focus

Published Wed, Aug 10, 2022 · 06:08 AM

European shares dipped on Tuesday as investors cautiously waited for key US inflation data later in the week for hints on the Federal Reserve’s next move on interest rate increases.

The pan-European Stoxx 600 index fell 0.6 per cent, erasing nearly all of its gains from its best session in nearly two weeks seen on Monday.

Declines on Tuesday were led by rate-sensitive tech stocks amid an uptick in bond yields as traders raised bets on a half-point interest rate hike by the European Central Bank in September, also pricing a high chance of a 75 basis point move in the United States next month.

Banks were among the only outperformers, rising 0.1 per cent.

Economically sensitive sectors such as miners and autos also fell after being among the top gainers in the previous session.

The Stoxx 600 has floundered this month after climbing 7 per cent in July on worries over dour economic data, rising geopolitical tensions and fears that higher interest rates could tip the economy into a recession.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

VIEW ALL

“Uncertainty and volatility will remain high as slower growth, earnings downgrades, front-loading of interest rate hikes by major central banks and a likely intensified squeeze on Europe’s natural gas supplies over the winter months weigh on investor sentiment,” said Nick Brooks, head of economic and investment research at ICG.

Focus is on a key inflation reading from the world’s biggest economy on Wednesday after surprisingly strong employment data last week dented hopes that the US Federal Reserve might go easy in its series of rate hikes aimed at tackling price pressures.

Among stocks, Swiss duty-free retailer Dufry rose 4.1 per cent as it said it saw strong sales momentum continue in July despite the soaring inflation.

Germany’s Continental said it expects a rise in auto production in the second half of the year as supply chains stabilise, but shares of the auto parts supplier slipped 6.5% on a heavy second-quarter loss.

Sanofi slipped 1.4 per cent as the drugmaker paused its recruitment globally for late-stage studies of its multiple sclerosis drug.

Shares of IWG plunged 11.4 per cent as the office rental group’s first-half results failed to impress analysts who are expecting rising inflation and gloomy economic outlook to hamper its recovery.

Second-quarter earnings for companies that are part of the Stoxx 600 are expected to rise 31.6 per cent from a year earlier, according to Refinitiv, higher than estimates of 28.1 per cent from last week. REUTERS

READ MORE

BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to  t.me/BizTimes

Capital Markets & Currencies

SUPPORT SOUTH-EAST ASIA'S LEADING FINANCIAL DAILY

Get the latest coverage and full access to all BT premium content.

SUBSCRIBE NOW

Browse corporate subscription here