Europe: Shares dragged lower by real estate, rate hike worries

EUROPEAN shares ended lower on Thursday, with real estate stocks leading the falls, as investors grew increasingly worried about the prospects of interest rates remaining higher for longer.

The real estate sector dropped 3.2 per cent to more than two month lows, with shares in Germany’s LEG Immobilien tumbling 11.4 per cent after the firm suspended its dividend.

The Stoxx 600 index closed down 0.2 per cent after recouping some of its losses earlier in the trading session.

“It’s fairly obvious that real estate companies would come under pressure in a higher interest rate environment and (LEG Immobilien) comments definitely got people thinking in a different light about companies and their ability to handle economic uncertainties,” said Steve Sosnick, chief strategist at Interactive Brokers.

Across the Atlantic, Wall Street gained ground as economic data hinted at signs of cracks in the tight US labour market ahead of key non-farm payrolls data on Friday, indicating that the Federal Reserve’s restrictive monetary policy is beginning to work as intended.

All eyes will be on the European Central Bank next week, when it is expected to hike its key lending rate by 50 basis points amid numerous policymakers calling for the central bank to keep hiking rates in subsequent meetings.

Although European stocks had a good start to the year, mixed economic data from China and worries that the ECB would stay hawkish for longer strained momentum in equities to the end of February and into March.

European miners slid 2.7 per cent, tracking lower copper prices.

Hugo Boss fell 2.1 per cent after the German fashion house forecast 2023 sales to grow more slowly than last year.

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US: Stocks fall as banking shares tumble

Credit Suisse shed 1.9 per cent after the bank delayed publishing its annual report due to the US market regulator raising questions about earlier financial statements.

Shares of Dassault Aviation soared 12.2 per cent to a record high after the French aircraft manufacturer reported better-than-expected results for 2022.

And Deutsche Post reversed early declines to rise 1.6 per cent as the German group hiked its dividend for 2022 after a record year, but warned of a challenging year ahead. REUTERS