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European stock markets declined on Tuesday as rising government bond yields and fresh euro zone inflation data increased expectations of an interest rate hike by the European Central Bank next week. The FTSE 100 eased 0.3 percent, Germany's Dax slipped 1.1 percent, and France's Cac 40 fell 0.4 percent. Higher oil prices pressured airline stocks including Ryanair, while drugmaker Novartis jumped on positive late-stage trial results. Meanwhile, US indices also slipped amid elevated bond yields and oil prices, marking the start of a historically weak month for equities.
Traders work on the floor at the New York Stock Exchange. The main US stock indices slipped on Tuesday, as elevated bond yields and higher oil prices kept investors at bay at the start of a historically weak month for equities.
Photograph: Michael Nagle/BloombergEuropean shares fell on Tuesday, pressured by a fresh rise in Government bond yields, while euro zone inflation data reinforced expectations that the European Central Bank will raise interest rates next week. Britain’s FTSE 100 eased 0.3 per cent as trading resumed after Monday’s public holiday, while Germany’s Dax slipped 1.1 per cent and France’s Cac 40 fell 0.4 per cent. Home builder Cairn saw its shares jump 4 per cent to €2.63 ahead of results on Wednesday.
In July, the company reported a 60 per cent increase in half-year revenue while noting it was selling an average of 100 units a week. Manna’s Bobby Healy: ‘We’ve worked through real challenges along the way’ AIB shares sagged a little as the latest euro zone inflation data enhanced the prospect of another European Central Bank rate hike next week. But rival Bank of Ireland rose 1.2 per cent.
The latest increase in oil prices saw Ryanair shares drop by 2 per cent to €22.73. Euro zone manufacturing activity grew at its fastest pace in more than four years in August, driven by the strongest rise in new orders since early 2022 and robust output growth, an S&P Global survey showed.
Signs of economic resilience and strong corporate earnings helped lift the Stoxx 600 to a record high in early August, but the index has since lost about 2 per cent. Novartis jumped 6.3 per cent, among the top gainers on the Stoxx 600, after the Swiss drugmaker said its oral multiple sclerosis drug remibrutinib met the main goals in two late-stage trials and outperformed a rival treatment.
Partners Group shed 7.3 per cent after the Swiss private equity firm said its chief executive was stepping down and warned its performance income would be lower than expected. London’s FTSE indices fell on Tuesday as Middle East tensions pushed global bond yields higher on inflation concerns, while Reckitt Benckiser gained after a favourable US court ruling in a baby formula case.
The yield on the UK 10-year Gilt hit its highest since 2008, while investors now see the Bank of England hiking interest rates by at least 32 basis points by year end, up from around 24 bps last week, LSEG-compiled data showed. Rate-sensitive sectors were especially hit. Banking stocks such as Barclays fell 3.4 per cent, Standard Chartered dropped 1.4 per cent and Prudential lost 1.3 per cent.
Reckitt Benckiser added 4.4 per cent after a US jury favoured the company in its trial over claims the company failed to warn that its products for premature babies could cause a deadly bowel disease. Bodycote jumped 4.1 per cent after US-based private equity firm Veritas Capital agreed to buy the thermal processing services company in a £1.85 billion deal.
WPP fell 2.5 per cent after a report said the advertisement company will cut up to 1,000 more jobs by year-end. The main US stock indices slipped on Tuesday, as elevated bond yields and higher oil prices kept investors at bay at the start of a historically weak month for equities.
A sharp increase in rate-hike bets has soured sentiment in recent sessions, while renewed clashes in the Middle East have heightened worries that borrowing costs may need to rise to contain price pressures. The sell-off in US Treasuries also pushed yields to their highest in months, dampening risk appetite further. Higher yields on risk-free Treasuries typically reduce the appeal of equities. Shortly after opening, the Dow Jones Industrial Average fell 215.70 points, or 0.41 per cent, to 52,970.
Six of the 11 main S&P 500 sectors were in negative territory. Consumer discretionary stocks led losses with a 1.6 per cent fall, while information technology slid 0.78 per cent. Broadcom was down 0.42 per cent ahead of results on Wednesday. Nvidia, Intel and AMD were down between 0.68 per cent and 2.56 per cent.
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