The EuroStoxx 50 continued to come under pressure on Monday, with expectations of continued strong interest rate hikes in the fight against high inflation prompting investors to pull back further. In addition, the escalation of the war between Russia and Ukraine at the beginning of the week weighed on prices. The Eurozone’s leading index recorded its fourth consecutive loss, falling 0.55 percent to 3,356.88 points. Its Parisian counterpart, the Cac 40, lost 0.45 percent to 5,840.55 points.
The British Footsie also fell 0.45 percent to 6,959.31 points. Stock markets in Europe have been heading south again since mid-last week, with vague hopes of a slightly less stringent monetary policy at the beginning of the week quickly giving way to disappointment. A robust US jobs report on Friday took the last bit of optimism away from investors, who saw the job data as evidence that a reversal of the US Federal Reserve’s strict stance on inflation is not to be expected – and that more significant interest rate hikes are on the way. In Europe and on Wall Street, the concerns about interest rates led to substantial losses over the weekend. Stephen Innes of asset manager Spi spoke of a sell-off on the markets reflecting the concerns of investors, who now have to expect further tightening of monetary policy until there are job losses.
The negative effects of this approach currently represent another downside risk for stock markets. Meanwhile, at the beginning of the new trading week, European investors are also looking at the latest developments in the Ukraine war with growing concern. After the explosions on the Crimea bridge, which is of strategic importance to Russia, rocket attacks were reported in numerous Ukrainian cities and in the capital Kiev on Monday. Among the sectors, technology stocks were at the bottom of the European performance table with a 1.9 percent loss – market participants pointed to the already high losses in the sector on Wall Street over the weekend.
The bad mood is now spilling over, as significantly higher interest rates can increase the financing costs of the very growth-oriented tech companies. In addition, rising interest rates reduce the current value of the high profits that technology companies want to generate in the future. Among individual stocks, Renault was the standout performer, up 2.4 percent. The prospect of renewing the recently fragile alliance with Japanese partner Nissan provided some support. The two companies are reportedly in talks about strategic cooperation in markets, products and technologies. Vodafone shares rose by around one percent. According to a report from the news agency Bloomberg, based on insider sources, there are said to be further interested parties in the sale of Vantage Towers, the company’s mobile phone mast subsidiary, in addition to American Tower and Cellnex. First offers are expected this week.
Vantage Towers shares rose by three and a half percent in Frankfurt. At the top of the “Footsie”, DS Smith shares soared by more than twelve percent. The packaging manufacturer reported strong sales growth and effective cost reduction in the first half of the year.