Prospects of US rate hikes and economic slowdown keep markets subdued

European shares closed at 11-week lows on Tuesday, extending declines to a sixth straight session, as expectations of another large interest rate hike by the US Federal Reserve kept risk-taking bets in check.

In the US, Wall Street’s main indexes as fell as investors positioned themselves for new economic projections and another big rate hike.

Dublin

The Iseq fell 1.6 per cent in Dublin, as its major stocks slumped on global economic worries. Even the two pillar banks finished in the red, despite the prospect of more rate hikes, which tend to benefit bank shares. AIB was virtually flat at €2.58, while Bank of Ireland was down 1.75 per cent to €7.17.

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Heavyweight building materials giant CRH finished the session down 3.6 per cent at €34.23, as the prospect of higher interest rates and an economic slowdown in the US weighed. Insulation group Kingspan, which also has significant US operations, was down 3.7 per cent to €53.72.

Tullow Oil, which is due to delist soon from the Dublin market, was up almost 5 per cent to 54.1 cents per share, as it continues its good run on the back of elevated crude prices.

London

The commodity-heavy FTSE 100 reversed early gains to close down 0.6 per cent after a holiday on Monday to mark Queen Elizabeth’s funeral.

UK’s rate-sensitive banks climbed 0.8 per cent. The domestically focused FTSE 250 index fell 1.4 per cent, also hitting a two-week low, as real estate and retail stocks each declined more than 4 per cent.

Moonpig Group dropped 7.5 per cent as the online greeting card and gifting platform reiterated its full-year outlook, while home improvement retailer Kingfisher, which owns B&Q, slid 3.9 per cent after reporting a 29.5 per cent fall in first-half underlying profit.

Recruiting firm SThree forecast a higher-than-expected annual profit, helped by continued demand for hiring in the science, technology and related sectors, sending its shares 4.1 per cent higher.

Future tumbled 17.6 per cent after the media company confirmed a report that its chief executive was planning to step down.

Europe

The pan-European Stoxx 600 which had risen as much as 1 per cent earlier in the session, ended down 1.1 per cent with nearly all major sectors in the red.

Real estate stocks slumped 4.1 per cent led by Swedish names after Riksbank kicked off a central bank heavy week with a surprise 1 percentage point hike in interest rates. As the move could exacerbate the challenges facing the heavily leveraged real estate industry, Stockholm-listed Fastighets AB Balder, Wallenstam and Sagax, dropped between 6 per cent and 7 per cent.

Sweden’s main stock index slumped 2 per cent to hit near two-year lows. The German Dax was down more than 1 per cent by close while the French Cac finished 1.35 per cent lower.

Amid an energy crisis in Europe, German utilities RWE and Uniper got closer to striking long-term deals to buy liquefied natural gas from Qatar’s North Field Expansion project to help replace Russian gas, Reuters sources said. Shares of Uniper and parent Fortum gained between 3.8 per cent and 9.5 per cent, respectively.

Bachem Holding was up 14 per cent, after the Swiss biotech supplier signed two new contracts for peptides.

New York

All of the 11 major S&P sectors declined, with economy-sensitive real estate and materials sectors down 2.1 per cent each.

Shares of Ford dropped 10.5 per cent after it flagged a bigger-than-expected $1 billion (€1 billion) hit from inflation and pushed delivery of some vehicles to the fourth quarter due to parts shortages.

Shares of rate-sensitive growth companies were mixed. Apple rose 1.8 per cent, while Alphabet and Amazon.com fell 1.5 per cent and 1.2 per cent, respectively.

PayPal dipped 3 per cent after Susquehanna Financial Group downgraded the fintech company’s stock to “neutral” from “buy”.

(Additional reporting: Reuters)