Europe: Stocks fall for third straight day as earnings, higher yields drag
EUROPEAN stocks hit a three-week low on Thursday, hurt by disappointing earnings reports and elevated US bond yields, though British stocks regained some ground after the Bank of England raised rates in line with expectations.
The pan-European Stoxx 600 index fell 0.6 per cent, ending its third straight session in the red.
Stocks globally came under pressure as US bond yields hit nine-month peaks following strong private jobs data and the announced refunding of Washington’s maturing debt.
Further dampening the mood, a survey showed the downturn in euro zone business activity worsened more than initially thought in July as the slump in manufacturing was accompanied by a further slowing of growth in the bloc’s dominant services industry.
“If you look at that (weak PMI) in conjunction with GDP as well in Europe, which is kind of barely positive at the moment, it’s not looking particularly rosy,” said Michael Field, European Equity Strategist at Morningstar.
The mood in European markets darkened this week as muted factory activity data, signs of sticky inflation and a surprise downgrade in the US credit rating pushed investors to step back from a market that had hit multi-year highs.
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The Stoxx 600 has shed around 3 per cent since touching a 1-1/2-year high last week.
UK’s FTSE 100 ended down 0.4 per cent, but pared a large portion of its early losses after the Bank of England raised rates by 25 basis points, a step down in the pace of monetary tightening from its previous meeting.
Germany’s Infineon tumbled 9.3 per cent to the bottom of the benchmark index after the chipmaker forecast fourth-quarter revenue would come in below market expectations due to weak demand from makers of personal computers and smartphones.
Infineon’s shares logged their worst single-day percentage loss in over three years, while shares of other semiconductor firms such as ASML and Nordic Semiconductor dropped between 1.2 per cent and 2 per cent, dragging the broader technology sector down 1.7 per cent.
Deutsche Lufthansa slid 5.5 per cent despite the German airline group’s upbeat forecast for travel demand, as investors worried about high costs eating into profit.
Making the banks index one of the few sectoral gainers for the day, shares of Societe Generale, France’s third-biggest listed bank, gained 3.5 per cent after it reported better-than-expected quarterly earnings.
Energy firms were also a bright spot, up 0.8 per cent.
Anheuser-Busch InBev climbed 1.3 per cent after the world’s largest brewer reported higher-than-expected quarterly earnings and retained its 2023 forecast. REUTERS
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