European shares drop after surprise move by Bank of Japan rattles markets

European shares fell on Tuesday, pulled down by rate-sensitive tech and industrial stocks, after the Bank of Japan (BOJ) rattled global markets with a surprise policy shift that would allow long-term interest rates to rise further.

The BOJ decided to allow the 10-year bond yield to move 50 basis points either side of its 0 per cent target, wider than the previous 25-basis-point band, in a move aimed at easing some of the costs of prolonged monetary stimulus.

The policy tweak was widely seen as the beginning of a potential end to Japan’s ultra-loose monetary policy and comes just as hawkish messages from other big central banks last week doused hopes of an end to monetary policy tightening any time soon.

DUBLIN

The Iseq slipped 0.4 per cent in line with the performance of big European indices in Germany and France. Losses were once again limited by gains for banks, with Bank of Ireland climbing 2.6 per cent to €8.58 and AIB rising 3.6 per cent to €3.48.

Sewage crisis: why this UK election is being fought on – and in – rivers and lakes

---

Hubristic Woodford was the orchestrator of his own downfall

---

Despite what people may think, taxes in Ireland are low compared to Europe

---

China’s view of the world puts Ireland between a rock and a hard place

---

Post office quarrels; drug dealing affects city-centre businesses

Listen | 42:52

But Ryanair was in the red, with its stock falling 2.5 per cent to €12.54, while packaging group Smurfit Kappa dropped 1.7 per cent to €34.60. Index heavyweight CRH was also among the fallers, with the cement-maker declining 0.4 per cent to €36.88.

Elsewhere, food group Kerry slipped 0.5 per cent to €86.90, with cheesemaker Glanbia down 0.6 per cent at €11.77 and Paddy Power owner Flutter Entertainment losing almost 0.8 per cent to finish the session at €130.05.

LONDON

The UK’s blue-chip FTSE 100 edged higher on Tuesday, as rising shares of oil and mining majors helped shake off early weakness following the BOJ’s surprise monetary policy tweak.

The blue-chip FTSE 100 closed 0.1 per cent higher, further distancing itself from one-month lows hit last week. However, the domestically exposed FTSE 250 index dropped 0.6 per cent to hit a six-week closing low.

Among single stocks, Petrofac lost 3.2 per cent after plunging as much as 10 per cent during the day after the oilfield services provider warned that it said it could post an operating loss for the year.

Sage Group slid 2.8 per cent after analysts at UBS downgraded the software company to “sell” from “neutral”.

EUROPE

The region-wide STOXX 600 index closed down 0.4 per cent. Germany’s DAX index was down 0.4 per cent as German 10-year bond yields jumped to their highest levels in more than a month. Data showing an easing in producer prices for the second straight month in Europe’s largest economy did little to calm market jitters.

Rate-sensitive tech stocks declined 1.2 per cent, while industrials followed suit with losses of 0.8 per cent. Real estate stocks slid 2.2 per cent to hit their lowest in more than six weeks. Limiting losses on the STOXX 600, banks added 2.5 per cent.

China-exposed luxury firms such as the France-based luxury group LVMH fell 0.6 per cent on fears around rising Covid cases in the world’s second-largest economy. Gucci owner Kering slid 3.8 per cent.

Shares of Orange slipped 1 per cent after the French telecoms group said its deputy chief executive and head of finance is leaving the company.

NEW YORK

Wall Street’s main indexes edged higher on Tuesday, led by energy and financial stocks, while Treasuries fell following the BOJ’s shock move, with the benchmark 10-year Treasury yield rising to a three-week high of 3.68 per cent.

Tesla lost 2.6 per cent in early trading after at least three brokerages cut electric vehicle maker’s target price to between $177 and $285 on growing concerns of demand weakness and risk from Elon Musk’s Twitter distraction.

Wells Fargo & Co slid 0.7 per cent after US regulators fined the lender $3.7 billion, citing widespread mismanagement of auto loans, mortgages and deposit accounts.

— Additional reporting: Reuters