European shares post third straight week of losses as downturn fears mount

European stocks staged a tentative rally on Friday, but posted their third straight week of losses as a raft of interest rate hikes from big central banks stoked worries about a sharp economic slowdown.

The pan-European Stoxx 600 index rose 0.1 per cent in volatile trade, but ended the week 4.6 per cent lower.

Investor concerns about a recession went into overdrive during the week as rate increases in the US and UK were followed by a surprise move in Switzerland to quell an inflation surge.

“Bargain-hunting is the name of the game, but ultimately the big picture never really went away,” said David Madden, market analyst at Equiti Capital.

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The Stoxx 600 has shed about 17.3 per cent so far this year on worries over the deteriorating economic outlook and hit to corporate earnings from surging prices and aggressive tightening measures by central banks.

Dublin

The Iseq index climbed almost 1 per cent higher to 6,516.71, having fallen on Thursday to its lowest level since October 2020.

Providence Resources stood out as a weak spot, sliding 23 per cent to 2c, after the oil and gas explorer raised a conditional $1.8 million (€1.7 million) of short-term funding as it continued to await for a key lease to develop its Barryroe oil project off the Cork coast.

Bank of Ireland advanced 4.9 per cent to €6.48, while housing stocks were also in demand, with Cairn Homes gaining 1.3 per cent to 99c and Glenveagh Properties moving 1.9 per cent higher to 91c.

London

London’s Ftse 100 ended 0.4 per cent lower on Friday, weighed down by weakness in resource-linked shares, and recorded its third straight week of decline on worries about sluggish economic growth.

However, the domestically focused mid-cap Ftse 250 index advanced 1.1 per cent, powered by a 5.0 per cent surge in shares of Future after the UK media company reaffirmed it was on track to achieve full-year 2022 guidance.

“Rising inflation, interest rates and a rising chance of a recession have all served to turn stomachs in equity-land. Investor confidence can’t have been completely shattered, however, judging by the fact some people were happy to go shopping for bargains after the recent sell-off,” said Russ Mould, investment director at AJ Bell.

Among other stock moves, Tesco said it was seeing early indications of changing customer behaviour due to surging inflationary pressures that had made the market “incredibly challenging”. Shares recouped early losses to end 0.8 per cent higher.

Europe

Among the worst-hit European sectors this week were technology, retail and commodity-linked sectors such as oil and gas, and miners.

Bridgewater Associates has placed at least $6.7 billion in bets against European stocks, according to data group Breakout Point, in a sign that the hedge fund firm may be pessimistic about companies on the Continent.

Among individual stocks, Spanish lender Santander gained 2.3 per cent after it named Hector Grisi as its new chief executive officer, replacing long-time executive Jose Antonio Alvarez.

Finland-based Nokian Tyres jumped 10.3 per cent after it raised its net sales guidance for 2022.

New York

Wall Street’s main indexes were struggling to find momentum in early afternoon trading following a brutal sell-off this week due to recession fears triggered by a series of interest rate hikes by the Federal Reserve and other big central banks.

Six of the 11 big S&P sectors gained. The S&P energy sector fell nearly 20 per cent on the week and was on course to top weekly losses, as crude prices took a hit from global slowdown fears. Still, the sector has rallied 37 per cent this year on soaring oil prices.

US shares of Alibaba jumped after Reuters reported China’s central bank had accepted an application by the company’s affiliate Ant Group to set up a financial holding company.

Revlon surged after a news report stated that Indian conglomerate Reliance Industries was considering buying out the cosmetics company in the US, days after the cosmetics giant filed for bankruptcy.