European shares dealt double whammy by hawkish ECB, tech slump


LONDON: European shares tumbled on Thursday following indicators that the European Central Bank would doubtless hike charges this 12 months, whereas weak outcomes from Facebook proprietor Meta added to strain on international expertise shares.

The pan-European STOXX 600 closed down 1.8% with tech shares the worst performers, shedding 3.5%.

The sector was pressured by a spike in bond yields after ECB head Christine Lagarde selected to not repeat her previous remark {that a} 2022 price hike was unlikely, within the face of upper inflation.

Jitters over coverage tightening this 12 months noticed European expertise shares plummet 12% in January, their worst month because the peak of the 2008 monetary disaster.

The prospect of rising rates of interest dents the worth of future tech earnings. The Bank of England earlier at present additionally raised charges.

Adding to strain on international expertise shares, Facebook proprietor Meta misplaced practically 1 / 4 of its worth after posting a lot weaker outcomes.

“Today’s ECB assembly marks an necessary hawkish shift. For some, it even seems to be just like the late revenge of the hawks,” wrote Carsten Brzeski, international head of macro at ING.

“Assuming that power values don’t dive over the subsequent 4 weeks, we anticipate the ECB to hurry up the discount of web asset purchases and to carry them to an finish in September, permitting the ECB to hike the deposit price not less than as soon as earlier than the tip of the 12 months.”

Euro zone inflation rose to a document excessive in January, pushed mainly by will increase in gasoline values.

European banks had been one of the best performers on Thursday, whereas telecom shares had been supported by Deutsche Telekom, which rose 2.6% on sturdy outcomes from its U.S. unit T-Mobile.

A optimistic fourth-quarter earnings season has supplied some solace to the STOXX 600, after a dismal efficiency in January.

Shell rose 1.4% as the corporate boosted its dividend and share repurchases after quarterly income hit their highest in eight years, fuelled by larger oil and gasoline values and robust gasoline buying and selling efficiency.

Swiss drugmaker Roche fell 2.4% after saying gross sales progress would gradual this 12 months because it braces for much less demand for its COVID-19 medicines and diagnostics.

Publicis Groupe, the world’s third-biggest promoting company, added 0.5% after forecasting natural gross sales progress of 4% to five% this 12 months, and as its 2021 earnings exceeded pre-pandemic ranges to achieve new information.

Sweden’s Skanska firmed 4.8% after it posted quarterly revenue above market expectations, and mentioned market exercise in building had picked up regularly throughout the 12 months.- Reuters

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