On Wednesday, there was a slide in European stocks as the focus of investors shifted towards the upcoming French elections. The Stoxx 600 index, which covers all of Europe, experienced an early surge but ultimately dropped close to 0.6%, largely due to growing bond market yields throughout the euro zone.
Recent reports suggesting a spike in inflation rates in Canada and Australia have heightened worries that interest rates may remain high for a more extended period than predicted. XTB’s research director, Kathleen Brooks, suggested that the bond market’s impact is causing a decrease in risk sentiment due to the resurgence of inflation concerns. The current inflation rate in Australia is the highest among the developed nations, sparking fears in the market that inflation might surge again, thereby derailing hopes for a cut in interest rates.
In Dublin, the Iseq All-Share index fell by 0.8%, ending at 9,441.28. Property shares sensitive to rates were unstable, with Glenveagh Properties and Cairn Homes dropping by 0.8% and 0.3% respectively. AIB remained consistent at €5.04 moments before the Government announced a 5% stake sale is in progress. This would reduce their stake to 25.5%. Concurrently, Bank of Ireland’s shares rose by 0.9%.
The trend in London mirrored the European market, as stocks slipped for the third consecutive session. It was energy shares that proved to be the most burdensome, and due to impending release of the Federal Reserve’s critical inflation gauge on Friday, investors remained wary. The FTSE 100 and FTSE 250 both dipped by 0.3%. The pound also depreciated by 0.5% against the dollar. Investors are redirecting their funds to the dollars as caution grows before the release of the personal consumption expenditure price index on Friday. In the UK, the investors will be anticipating the announcement of the GDP on Friday for further insight on the future direction of interest rates.
The upcoming general election in the UK, set for July 4th, is fuelling caution as investors fear political instability may unsettle the markets. Precious and industrial metal miners, within the FTSE 350 sub-sectors, saw some of the largest gains.
After a positive assessment from Jefferies, publishing company Future’s shares climbed 8.3%. In other news, after US food delivery company Doordash expressed interest in the company, UK firm Deliveroo saw a 1.2% increase in share prices.
In Europe, auto stocks declined by 1.3%. Included in this was Volkswagen, Europe’s largest car manufacturer, whose shares fell by 1.6% following an announcement about a $5 billion (€4.68 billion) investment related to a collaboration with electric vehicle maker, Rivian.
Investor attention is on the upcoming US personal consumption expenditures data due this week; this will be influential in shaping views on the Federal Reserve’s interest rates. Key data from France, Spain, and Italy, regarding inflation, is also expected this week. The first stage in France’s snap parliamentary election happens on June 30th, with France’s primary CAC 40 index closing 0.7% down.
There were significant losses for Alfen after they released a profit warning, resulting in the energy storage specialist’s biggest single-day slump, losing 46.7% of its value.
Over in New York, Wall Street’s main indexes remained steady during mid-afternoon trading. Tech stocks tried to rally after a recent downswing, while investors await an important inflation report this week. Chip leader Nvidia saw its shares dip, impacting the wider Philadelphia SE Semiconductor index. Meanwhile, Apple’s stock increased after Rosenblatt upgraded its rating, and Tesla shares leapt to a near two-month high.
Lastly, Amazon’s shares skyrocketed, raising the company’s market value above $2 trillion, making it the fifth US business to reach this milestone. Appliance manufacturer Whirlpool saw a surge in shares after reports surfaced that German engineering group Robert Bosch may bid for the appliance maker.