On Tuesday, due to a lack of new information on China’s stimulus strategies, sectors associated with the world’s second biggest economy, such as mining and luxury, experienced a downturn, leading to a decrease in European stocks.
Meanwhile, in Dublin, the Iseq increased by 0.6% when key shares saw growth. Kerry Group underwent a rise of 0.5% to €90.85 after the food giant projected third-quarter results congruent with market predictions. Ryanair had a strong performance, seeing an increase of 1.85% to €16.52, and Cairn Homes added on 2% to reach €2.06 after issuing a position paper on passive housing, a form of energy efficient construction. Bank of Ireland ended with an increase of 1.3% at €9.57, while AIB remained stable at €5.02. Conversely, Kingspan saw a decrease of 0.7% to €81.55.
In London, the FTSE 100 experienced its worst day in two months, led by losses in the mining sector. This was followed by homebuilder Vistry taking a nosedive as it reduced its annual profit forecast. The main index fell by 1.4%, reaching a monthly low, with the mid-cap FTSE 250 index also decreasing by 1.1%.
A majority of sectors in the FTSE 350 experienced a downturn, with industrial metal miners seeing more than a 5% loss as prices of base metals decreased. This comes after an initial wave of optimism regarding China’s stimulus measures. Other sectors, including banking and energy, also faced significant selling pressure, with the latter falling by 2.7%, corresponding with the decline in oil prices.
Vistry stocks experienced a sharp fall of 23% as the company lowered its 2024 fiscal profit forecast, following the revelation that one of its divisions had underestimated some development costs – leading to a 4.2% fall in the household goods and home construction sector. Other homebuilders, such as Crest Nicholson, Bellway, Persimmon, and Taylor Wimpey, saw a decline between 1.1% and 6.5%.
Imperial Brands topped the FTSE 100 leaderboard with a gain of 4.1% after its recent declaration to enhance shareholder returns in the forthcoming financial year. It also predicted a rise of 20-30% in future generation tobacco alternatives, including vaping devices.
In the European market, the pan-European Stoxx 600 index faced a decline of around 1% reaching a fortnightly low before recouping some losses to end with a dip of 0.55%. Luxury brand companies like LVMH, Kering, Burberry and Hermes, with substantial revenue from China, experienced a decrease in their shares, ranging from 0.6% to 4.5%. Alcohol producers, Remy Cointreau and Pernod Ricard saw their shares plummet by 6.4% and 4.2% respectively due to China’s provisional anti-dumping policies on brandy imports from the European Union.
On Wall Street, the primary indexes opened on a positive note and remained steady in the opening hours of trade. Investors focused their interest on the imminent third-quarter earnings season and signals about the Federal Reserve’s forthcoming rate decisions. The majority of the S&P 5 00 sectors traded positively, except for energy stocks, which dipped over 2% due to a fall in oil prices after Monday’s surge. Wall Street’s “fear gauge”, the CBOE Volatility index, also witnessed a drop from Monday’s peak but continued to hover around a monthly high. The Dow Jones Industrial was adversely affected due to a 2.5% dive in Caterpillar shares. The materials sector also saw a 0.9% plunge, hitting a fortnightly low as metal prices declined due to faltering optimism about China’s stimulus actions. The gaming platform, Roblox, also experienced a 6.6% drop following Hindenburg Research’s announcement of a short interest in the company on Tuesday. The Big banks are poised to initiate the third-quarter earnings season this coming Friday.
Courtesy: Reuters.