European shares drop as investors fret over inflation and growth

European shares fell on Wednesday as weak German retail sales and slowing factory activity in the euro zone fanned worries about economic growth amid record high inflation. US equities also started the month lower after a strong set of data suggested the Federal Reserve has not yet slowed growth enough to tamp down inflation.

Dublin

The Iseq index was among the worst performing in Europe, finishing the session down more than 2.4 per cent after many of its biggest stocks slumped.

Irish multinationals with big operations in the US fell sharply, as worries grew about aggressive Fed action having the potential to tip the economy there into recession.

Insulations group Kingspan was down almost 5 per cent to €73 per share, while building materials supplier CRH was down 1.6 per cent to €38.

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Tullow Oil, which maintains its main listing in London, was up on the Dublin market by 3.6 per cent to 64.8 cents per share after it announced a merger with Capricorn Energy.

London

UK stocks edged lower on Wednesday in advance of an extended public holiday weekend, as ex-dividend trading impacted shares of National Grid and Vodafone.

The blue-chip FTSE 100 snapped a five-session winning streak to drop 1.0 per cent with National Grid and Vodafone down 4.3 per cent and 3.0 per cent, respectively. The domestically focused midcap index slipped 0.7 per cent.

British footwear brand Dr Martens surged almost 20 per cent after it forecast higher annual revenue growth thanks to price hikes made in response to inflation and stronger sales of its shoes and boots. It raised sales guidance as revenue rose 18 per cent to more than £908 million (€1.06bn) in the year to the end of March. Pretax profit rose from less than £70 million to more than £214 million in the year.

Elsewhere, BT’s shares seemed to be unaffected – up 0.7 per cent – by the news that one of its deals is being probed by competition regulators. The company’s deal to form a joint venture with Eurosport owner Warner Bros Discovery has drawn scrutiny from the Competition and Markets Authority.

Capricorn Energy gained 1.2 per cent after agreeing its merger with Tullow Oil in an all-stock deal worth £656.9 million.

Europe

The pan-European STOXX 600 index was down 1.0 per cent after gaining as much as 0.4 per cent earlier in the day. The benchmark shed 1.6 per cent in May as surging inflation stoked worries about aggressive central bank action. Declines were led by travel stocks and real estate. Regional bourses also fell – Germany’s DAX eased 0.3 per cent, while France’s Cac 40 dropped 0.8 per cent.

Data showed German retail sales fell a more-than-expected 5.4 per cent in April, while manufacturing growth in the euro zone slowed last month as factories faced supply shortages, high prices and a fall in demand.

Deutsche Bank’s asset manager DWS slumped 6.2 per cent after its chief executive officer said he would step down next week as the company faced allegations of misleading investors about “green” investments.

New York

Ten of the 11 big S&P sectors declined, with financial and healthcare stocks down 2.1 per cent and 2 per cent respectively. Energy stocks gained 1 per cent as Brent Crude rose to $117 a barrel.

ChargePoint Holdings slipped as analysts noted that the EV-charging network firm’s margins came under pressure due to rising costs and supply-chain disruption. Delta Air Lines also fell after raising its revenue outlook but warned it likely won’t grow capacity through the year’s end.

Salesforce jumped 9.8 per cent after the enterprise software firm raised its full-year adjusted profit outlook and said it did not see any material impact from the uncertain broader economic environment.

Victoria’s Secret climbed 5.7 per cent after the lingerie brand topped first-quarter profit estimates as costs fell.

(Additional reporting: Reuters/PA/Bloomberg)