Europe: Stocks slide for third day running as yields march higher

EUROPEAN stocks edged down for a third day in a row on Wednesday (Oct 4), driven by declines in commodity-linked stocks and retailer shares, while US and European bond yields paused for breath after hitting multi-year highs.

The pan-European Stoxx 600 index ended down 0.1 per cent, touching fresh six-month lows.

Leading sectoral declines, energy dropped 2.1 per cent, posting its worst day in nearly three months, as oil fell by over US$3 a barrel on demand fears.

Miners fell 0.9 per cent, tracking lower metal prices.

Retailers dipped 1.7 per cent, hitting their lowest levels in nearly four months with consumers facing the brunt of higher prices.

“More and more retailers, even the high-end luxury companies, have started to face the fact that consumers are not spending a lot, they are saving more, and in some cases are going into lower margins,” said Anthi Tsouvali, multi-asset strategist at State Street Global Markets.

Banks slipped 0.38 per cent.

“Banks actually benefited for a little bit with the higher interest rate. But now we’re starting to see that loan growth demand is slowing,” Tsouvali added.

Global equities have been on a sell-off spree recently as hawkish views from central bank policymakers and robust US economic data bolstered bets that interest rates will stay elevated, sending bond yields higher.

SEE ALSO

Europe: Shares fall 1% as bond yields surge

After surging to more-than-a-decade highs, eurozone bond yields steadied with European Central Bank (ECB) policymakers suggesting the rate hike cycle is likely completed.

Longer-dated US Treasury yields eased from 16-year highs after a cooler-than-expected ADP National Employment report.

A survey showed the eurozone economy probably shrank last quarter, with demand falling in September at the fastest pace in almost three years, as consumers reined in spending.

Britain’s government proposed banning younger generations from ever buying cigarettes, a move that would give the country some of the world’s toughest smoking rules.

Shares of cigarette makers Imperial Brands and British American Tobacco fell 2.8 per cent and 1.7 per cent respectively.

Novartis rose 1.8 per cent after the Swiss drugmaker said it had completed the spinoff of its generics and biosimilars business Sandoz.

Tesco gained 4.3 per cent after Britain’s biggest supermarket upgraded its annual profit guidance as food inflation eased and shoppers snapped up both its low-price offers and its premium “Finest” ranges.

Fund distribution company Allfunds soared as much as 10.6 per cent with traders attributing the rise to a media report that the firm has enlisted banks to explore its sale for more than five billion euros (S$7.2 billion). REUTERS