European stocks fall as US inflation rises

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The DAX chart of the German stock price index is pictured on the stock exchange in Frankfurt, Germany, September 12, 2022. REUTERS/Staff

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  • US inflation rises more than expected in August
  • Tech, real estate stocks slide
  • STOXX 600 retreats from two-week highs
  • Schneider to buy remaining shares of Aveva – report

Sep 13 (Reuters) – European shares tumbled 1.6% on Tuesday, falling from two-week highs hit earlier in the session, as warmer-than-expected U.S. inflation data cemented bets for another major interest rate hike by the Federal Reserve.

Interest-rate-sensitive technology stocks (.SX8P) weighed the most, down 3.2%, while real estate stocks (.SX86P) lost 3.9%. The defensive Utilities sector (.SX6P) was the only gainer among the major sub-sectors in Europe.

Headline inflation in the United States came in at 8.3% in August, up more than expected, and core inflation accelerated amid rising rent and healthcare costs. health, giving the Fed ammunition for a third 75 basis point interest rate hike next Wednesday. Read more

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The pan-European STOXX 600 index (.STOXX) posted a three-fight winning streak, while Germany‘s DAX (.GDAXI) fell 1.6%, giving up gains that had taken it nearly four weeks longer. early Tuesday.

“The Fed is America’s central bank, but it’s the world’s central bank. And when it drains liquidity, it impacts asset valuations everywhere,” said Patrick Armstrong, chief investment officer at Plurimi Wealth.

“Interest rate sensitive stocks in Europe (such as) tech stocks have been hit hard. Higher interest rates are really changing the growth potential of these types of companies.”

Last week, the European Central Bank announced a surprisingly large rate hike of 75 basis points, the clearest sign that it will not budge in its fight against inflation.

Tech stocks have lost nearly 30% so far this year – among the biggest sector declines in Europe after the names of real estate and retail – as investors positioned themselves for a rate environment high interest rates amid soaring post-pandemic inflation.

Among Tuesday’s gainers were shares of British software maker Aveva Group Plc (AVV.L) which climbed 3.1% after reports that French industrial group Schneider Electric (SCHN.PA) was about to strike a deal to take full control of Aveva for around £3.5 billion. ($4.1 billion). Read more

UBS Group AG (UBSG.S) rose 0.7% on plans to increase its dividend 10% to $0.55 per share. Read more

The STOXX 600 retail index (.SXRP) lost 3.5% after UK online supermarket Ocado Retail, a 50/50 joint venture between Ocado Group (OCDO.L) and Marks & Spencer (MKS. L), said he expected a slight drop in sales. over the whole of 2022.

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Reporting by Shreyashi Sanyal in Bengaluru; Editing by Saumyadeb Chakrabarty, Subhranshu Sahu and Jonathan Oatis

Our standards: The Thomson Reuters Trust Principles.

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