On Thursday, European equities fell to their lowest level in three months as increased concerns about potential interest rate hikes globally weighed on risk sentiment, while shares of Embracer group fell following a discounted share offering.
The pan-European STOXX 600 index (STOXX) fell 2.3% to its lowest level since late March, while the EURO STOXX 50 index (STOXX50E) fell 2.9%.
The CAC 40 (FCHI) in France led regional falls, falling 3.1%.
Concerns about higher rates lasting longer were heightened after a poll revealed that private payrolls in the United States expanded more than predicted in June, showing that the labor market remained solid despite rising chances of a recession from higher rates.
This comes after the Federal Reserve minutes from the June meeting revealed that a united central bank resolved to hold rates stable to buy time and examine the need for further rate hikes.
“Equities were already under heavy pressure coming into Thursday’s session following hawkish Fed minutes, but a remarkably robust ADP payroll report has put the boot in,” Chris Beauchamp, chief market analyst at online trading platform IG, said.
“The stage appears set for the two additional rate hikes alluded to by the Fed in its June decision, as the US economy continues to demonstrate remarkable resilience.”
Germany’s two-year bond yield, which is extremely sensitive to interest-rate predictions, surged to its highest level since fall 2008, putting pressure on the stock market.
The technology sector (SX8P) lost 3.0%, while the real estate sector (SX86P), which is sometimes used as a proxy for bonds, fell 4.2%.
Meanwhile, investors will be watching U.S. Treasury Secretary Janet Yellen’s maiden trip to China, where she is expected to focus on re-calibrating ties between the world’s two largest economies following Beijing’s new limits on metal exports.
Due to big scale orders of ships, satellites, and military vehicles, German industrial orders increased much more than projected in May.
Currys (CURY.L) fell 9.7% to a 20-year low, as the British electrical retailer announced it will not pay a final dividend following a 38% decline in full-year profit.
Embracer (EMBRACb.ST), the STOXX 600’s worst loser, plummeted 13.8% after the gaming company raised 2 billion crowns ($182 million) in a share offering to institutional investors.
FinecoBank (FBK.MI) climbed 6.0% after the asset manager saw 765 million euros in inflows in June as capital moved out of deposits and into assets under management (AUM) products.
- European shares slumped to their lowest level in three months on Thursday, driven by concerns about further interest rate hikes globally.
- Embracer group, a gaming company, saw its shares slide after a discounted share issue.
- The U.S. Federal Reserve’s minutes indicated a possibility of further rate hikes, adding to market uncertainty.
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