Europe: Inflation nerves drive stocks' worst sell-off in three weeks

[BENGALURU] European stocks retreated from all-time highs on Tuesday, with travel, retail and technology shares among the top losers after worries about rising US inflation knocked back US indices.

The pan-European Stoxx 600 index fell 1.9 per cent and was on course for its biggest percentage decline in three weeks. The main bourses in Frankfurt, Paris and London all lost close to 2 per cent.

Global sentiment soured after investors dumped Wall Street's market-leading growth stocks on Monday ahead of the latest reading on US consumer prices, which many fear could prompt the Federal Reserve to rethink its monetary policy stance.

"Most will wait for the inflation print to decide whether they need to reduce risk further or see it as an opportunity," Sebastien Galy, senior macro strategist at Nordea Asset Management, wrote in a morning note.

"That suggests that losses today in the European and US  equity market should stay below the 2 per cent range."

US tech stocks looked set for another round of sell-off, with Nasdaq futures down 1.3 per cent as investors worried an increase in US interest rates could weigh on their valuations.

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European tech shares fell 2.3 per cent to their lowest in six weeks, while miners handed back some of their strong gains notched in the previous session.

Travel and leisure stocks slumped 4.1 per cent as Sweden’s Evolution Gaming Group tumbled 9.1 per cent after the bookrunner announced the pricing of block trades.

Meanwhile, British Airways-owner IAG dropped 5.9 per cent after announcing a convertible bond offering plan worth 800 million euros (S$1.29 billion).

German conglomerate Thyssenkrupp fell 5.9 per cent despite raising its full-year adjusted earnings outlook. The company, however, said no major decisions were to be expected from a supervisory board meeting scheduled for May 19.

German minerals group K+S also slipped 2.6 per cent despite raising its 2021 core profit forecast.

The pullback in European stocks comes after a strong rally, with the Stoxx 600 up about 10 per cent so far this year as a solid earnings season and economy re-opening optimism saw more buying in the economically sensitive parts of the market.

Among the few gainers was UK’s lifestyle e-commerce company THG HG, which soared 12.6 per cent on raising more than US$1 billion in equity, including US$730 million from Japan’s SoftBank Group.

REUTERS