European shares dropped on Monday, with technology stocks leading declines, while bond yields surged as comments from central bankers heightened fears of aggressive measures to stamp out inflation amid rising risks of a recession.
US stock indexes hit fresh one-month lows, adding to a sharp selloff last week as investors there also worried about the US Federal Reserve’s plan to keep raising interest rates in its fight against inflation, even at the cost of an economic slowdown.
Markets in Britain were closed for a bank holiday.
DUBLIN
The Iseq index fell by more than 0.5 per cent on thin trading volumes.
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Tullow Oil fell 3.2 per cent to 52 cents per share, broadly tracking a rise in oil prices, as it recovered some of its losses from over the last month.
Other defensive stocks were among the few bright spots on the exchange on a difficult Monday. Healthcare services group Uniphar rose more than 2.3 per cent to €3.48 per share, while the share price of medtech firm Healthbeacon rose almost 3.5 per cent to €3.
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Bank of Ireland finished the session ahead by 1.3 per cent to €5.80, although the other pillar bank, AIB, was more muted, finishing marginally ahead by 0.2 per cent to €2.18 per share. Meanwhile, Permanent TSB fell 3.8 per cent to €1.53.
Dairy group Glanbia, which has a large consumer and sports nutrition business in the US, fell by 1.2 per cent to €12.69, as the threat of recession in the US looms.
EUROPE
The Stoxx 600 index fell 0.8 per cent to a more than one-month low, with interest rate-sensitive tech stocks tumbling 2.4 per cent. Germany’s 10-year yield rose 10 basis points to a two-month high.
The dive in share prices came after European Central Bank board member Isabel Schnabel warned over the weekend that central banks must act forcefully to combat inflation, even if that dragged economies into recession while governing council member Francois Villeroy and policymaker Martins Kazaks also signalled another big rate step in September.
Real estate stocks, among sectors viewed as “defensive” or safer bets during times of economic uncertainty, saw the slimmest losses amid a broad-based Stoxx 600 selloff.
Uniper requested more financial help from the German government, raising the bill for bailing out the utility group to an eye-watering €19 billion, as soaring gas and power prices burn up its cash reserves. Shares of the company rose 3 per cent.
NEW YORK
US Treasuries slumped and stocks dropped as traders recalibrate their expectations in response to the Federal Reserve indicating that it will continue to raise interest rates to tamp down inflation.
The S&P 500 fluctuated after dropping as much as 1 per cent on Monday. The Nasdaq 100 trimmed declines after falling as much as 1.3 per cent. US Treasury yields rose, with the 10-year rate hovering around 3.1 per cent. The two-year yield had climbed to its highest level since 2007 before paring the advance.
Among the biggest drags on Monday, heavyweight technology and growth stocks such as Apple, Microsoft and Tesla fell between 1.4 per cent and 2.4 per cent due to the rise in treasury yields.
Energy stocks climbed 2.4 per cent, tracking a more than 3 per cent jump in oil prices as potential OPEC+ output cuts and conflict in Libya helped to offset a strong dollar.
Bristol Myers Squibb slid 5.6 per cent after its drug candidate for preventing ischemia strokes missed the main goal in a mid-stage trial.
Dow and Lyondell Basell Industries fell 2 per cent and 1.1 per cent, respectively, after Keybanc downgraded the chemicals company’s stocks to “underweight” from “sector weight”.
Catalent dropped 9.8 per cent after the contract drug manufacturer forecast downbeat 2023 revenue.
— Additional reporting: Reuters/Bloomberg
