European shares suffered their first monthly fall in six months on Wednesday as a surge in global bond yields reduced the appeal of riskier assets while investors parsed through cooler-than-expected US inflation data.
The pan-European Stoxx 600 closed 0.5 per cent lower, reversing gains from earlier in the session. It is down 2.5 per cent for the month and 1 per cent for the third quarter.
An energy-price shock from the Iran war, deteriorating government finances and a glut of issuances have prompted major central banks, including the Federal Reserve and the European Central Bank, to raise interest rates or adopt a more hawkish stance this month.
One analyst pointed to Federal Reserve chief Kevin Warsh’s speech at an economic symposium in Jackson Hole, Wyoming, in late August. “Everything got off on the wrong foot with Jackson Hole ... Kevin Warsh was more hawkish than we expected and put us on a path of a rate hike, and that just set the tone for the entire month,” IG Group chief market analyst Chris Beauchamp said.
RM Block
Oil was up nearly 14 per cent for the month, and set for the biggest climb since July, as US-Iran talks aimed at ending their war stalled.
Dublin
Shares in Ryanair trod water at €23.49 as elevated oil prices muddied the outlook for airlines. Chief executive Michael O’Leary said airlines could not keep fares low with current oil prices. Bank of Ireland and AIB were both down by 0.7 per cent and 0.9 per cent respectively along with their peers in Europe.
Home builder Cairn also shed value, dropping 1.3 per cent to €2.73. Food groups Glanbia and Kerry went in different directions amid mixed sentiment for the sector. Glanbia was moderately down while Kerry rose 0.7 per cent.
Europe
Most sectors on the Stoxx 600 ended the day lower. Banks and industrials lost 0.8 per cent and 0.7 per cent respectively. Insurers were the biggest losers with a 1.4 per cent fall.
British utilities rose a day after UK prime minister Andy Burnham made policy announcements for the sector. Pennon, SSE and National Grid rose between 2 per cent and 2.6 per cent, with the broader utilities sector 0.6 per cent higher.
Separately, data showed German inflation accelerated to its highest level since December 2023.
Among individual movers, Nordnet shares gained 1.1 per cent as JP Morgan resumed coverage on the stock with an “overweight” rating.
London
London’s FTSE-100 fell on Wednesday and posted a monthly loss as persistent inflation concerns and rising bond yields dampened investor sentiment.
The blue-chip index closed 0.29 per cent lower at 10,606 points, registering its biggest monthly loss since March, though notching a seventh consecutive quarterly gain.
Shares in London-listed Tullow Oil fell by half after the company lost an arbitration case over taxes on fields in Ghana that account for the bulk of its production.
Heavyweight banks and pharma stocks were the biggest drags in the blue-chip index, declining 0.7 per cent and 1 per cent respectively
Telecom stocks also dropped, with Airtel Africa shedding 3.3 per cent.
Among other stocks, Greggs advanced 8.2 per cent after the fast-food chain raised its annual profit outlook as underlying sales growth accelerated in the third quarter
Holiday and insurance group Saga surged 22.8 per cent to a near seven-year high after forecasting materially higher annual profit.
New York
The Nasdaq jumped more than 1 per cent on Wednesday, leading gains among Wall Street’s main indexes, as a softer-than-expected inflation reading buoyed hopes that the Federal Reserve might not hike rates as soon as next month.
A Commerce Department report showed the Personal Consumption Expenditures price index stood at 3.4 per cent on an annual basis in August against estimates of 3.7 per cent. Separately, second-quarter GDP data showed that the US economy grew at a solid clip.
Most megacap and growth stocks ticked higher, with Amazon.com and Apple up around 2 per cent each, while Alphabet advanced 3 per cent.
Software stocks were some of the best performers, with Palo Alto Networks up 3.7 per cent, Microsoft gaining 1.9 per cent and Intuit adding 2.6 per cent.
On the other hand, chip stocks weakened, with Advanced Micro Devices and Broadcom falling nearly 1 per cent each. – Additional reporting by Reuters
