Europe: Stoxx 600 snaps four-day rally on inflation, growth angst

EUROPE’S Stoxx 600 index fell on Wednesday as investors fretted about runaway inflation, the prospect of more interest rate hikes and a mixed batch of earnings reports.

The region-wide Stoxx 600 index ended 0.5 per cent lower, snapping a four-day rally that was mainly driven by hopes of a better-than-expected earnings season and the UK’s fiscal policy reversal.

Data showed UK inflation hit 10.1 per cent in September, matching the 40-year high touched in July, and putting more pressure on the Bank of England to step up interest rate hikes to rein in surging prices.

Euro zone September consumer inflation was revised marginally lower to 9.9 per cent from 10 per cent, but was still at a record high, underlining market expectations of more interest rate rises before the end of the year.

More than half of the sectors on the Stoxx 600 declined, with real estate and retailers leading the losses. The technology sector was boosted by strong results from ASML Holding NV.

ASML’s shares jumped 8.2 per cent after the chip equipment maker reported upbeat third-quarter sales and profit, and said it did not expect a large impact from US sanctions on China.

Just Eat Takeaway.com rose 1 per cent after Europe’s largest meal delivery company said it recorded an underlying quarterly profit earlier than expected.

Handelsbanken jumped 6.2 per cent after the Swedish bank reported forecast-beating record earnings, as interest income jumped in an environment of rising inflation and tighter monetary policy.

“Earnings numbers (are) all good but global inflation, macro events are going to take precedent,” said Michael Baker, head of online services at Oval Money. “The only way to combat inflation is to aggressively hike rates and so what the market is expecting now is a lot more aggression from central banks.”

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Nestle dipped 1.3 per cent after the world’s largest packaged food company’s CEO raised concerns about the “challenging economic environment” affecting consumers’ purchasing power. Sartorius dropped 16.6 per cent after the Franco-German lab equipment maker said it expected 2022 revenue to reach the lower half of its outlook.

Royal Unibrew slid 14.6 per cent after the Danish brewery cut its full-year outlook, citing inflation-driven pressure on consumer behaviour.

Shares of rival Campari and Carlsberg lost 2.7 per cent and 3.5 per cent, respectively, while Finnish brewery Olvi dipped 2 per cent. Olvi posted third-quarter results, which were also hit by rising price pressures. Fresenius SE gained 4.5 per cent on a report that Elliott Investment Management has taken a stake in the diversified healthcare company. REUTERS