Europe: China, rate woes send stocks to one-month lows

EUROPEAN shares closed at their weakest level in over a month on Monday (Sep 25) as worries about interest rates staying elevated for longer and a slowing Chinese economy dented the mood.

The pan-European Stoxx 600 index slid 0.6 per cent, down for a third consecutive session. Travel and leisure and personal and household goods indexes fell more than 2 per cent each to lead sectoral declines.

China-exposed luxury stocks such as LVMH and Kering shed 2.6 per cent and 4.5 per cent, respectively, amid persistent concerns about growth in the world’s second-largest economy.

Miners slid 0.8 per cent as metal prices weakened on higher inventories and fears of a higher-for-longer global interest rate regime.

Investors assessed a slew of central bank decisions, where the Federal Reserve struck a hawkish tone, the European Central Bank (ECB) signalled a pause in October and Britain, Switzerland and Japan were surprisingly dovish.

“September’s reputation as one of the worst months for stocks will have been bolstered by the last four weeks of trading,” said Chris Beauchamp, chief market analyst at online trading platform IG.

“A fresh climb in yields only adds to the stock market’s woes, as investors come to realise that when Powell says ‘higher for longer’, he really means it.”

Longer-dated eurozone bond yields rose, with Germany’s 10-year yield hitting its highest since 2011. The ECB last week raised interest rates to a record high of 4 per cent.

ECB president Christine Lagarde said on Monday the central bank’s high deposit rate could help cut inflation to 2 per cent, repeating the bank’s guidance that neither promises nor rules out further rate hikes.

SEE ALSO

Europe: Shares clock weekly decline as higher-for-longer rates loom

Germany’s DAX shed 1.0 per cent, with the latest data showing German business morale deteriorated in September, falling for a fifth month in a row.

German shares are the worst regional performers so far this quarter, down 4.6 per cent compared to the 2.5 per cent fall in Stoxx 600.

British gambling firm Entain shed 13.1 per cent after warning on online gaming revenue. Peer Flutter Entertainment slid 3.2 per cent.

SBB jumped 18.3 per cent after the Swedish property group divested 1.16 per cent of its education subsidiary EduCo to Brookfield Super-Core Infrastructure Partners for around 242 million Swedish crowns (S$29.9 million).

AstraZeneca climbed 1.3 per cent after Jefferies raised the drugmaker’s rating to “buy” from “hold”. REUTERS