European shares fall as weak German data points to economic slowdown

European shares fell on Wednesday for a sixth straight session as weak German economic data heightened fears about a slowdown, while rising bond market interest rates – or yields – also weighed on equities.

In further evidence of slowing economic growth, data showed German industrial orders fell more than expected in July, pulling back after a sharp gain in the aerospace sector the previous month.

“The market is focusing on the prospects of a continued weakening in the macro momentum within Europe and even the prospect of a mild recession in the coming quarters,” said Thomas McGarrity, head of equities for RBC Wealth Management in the British Isles.

Dublin

The Iseq All Share index dropped a little more than 1 per cent to 8,682.52. Banking stocks were out of sorts – in line with the wider sector across Europe – as investors registered concern about the outlook for the euro-zone economy.

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AIB declined by 1.6 per cent to €4.10, while Bank of Ireland lost 1.9 per cent to €8.73 and Permanent TSB also dropped 1.9 per cent, to €2.06.

Cairn Homes lost 1.2 per cent to €1.13 as investors in the housebuilder positioned themselves in advance of its interim results on Thursday. Rival Glenveagh Properties declined by 2.5 per cent to €1.01.

Ryanair dipped by 0.8 per cent to €15.97, even after a raft of analysts issued upbeat reports on the carrier on the back of its capital markets day on Tuesday.

London

The FTSE 100 index in London edged 0.2 per cent lower. UK construction firms suffered a sharp drop in orders in August, adding to concerns about a slowing economy amid rising interest rates, data showed. The construction and materials index fell 1.1 per cent.

WH Smith tumbled 6.3 per cent after the books and stationery retailer fell short of a recently-raised profit forecast, even as annual revenue jumped 28 per cent.

The personal goods index, down 4 per cent, led sectoral declines, marking the worst day in over seven weeks.

Cybersecurity company Darktrace said changes to its sales commission would squeeze its earnings margin in the current year, sending shares down 2.5 per cent.

Bridgepoint shares rose 8.2 per cent after the alternative asset fund manager said it would buy Energy Capital Partners for an initial £835 million (€974 million), including debt.

Europe

European banks were among the worst performers, with an index for the sector sliding 1.5 per cent, touching eight-week lows.

The personal and household goods sector slumped 2.2 per cent, while financial services eased 1 per cent.

Italy’s banks-heavy stocks index led losses among European bourses, down 1.5 per cent.

The weak sentiment from August spilled into September on worries about how long major central banks will keep interest rates elevated amid fresh signs of weakness in Chinese and European economies.

China-exposed luxury heavyweight LVMH tanked 3.6 per cent, hitting an eight-month low. The European luxury sector lost 3 per cent.

Meanwhile, European Central Bank (ECB) policymakers warned investors who are overwhelmingly betting against an ECB interest rate hike next week that the decision was still up in the air.

On the last day before the ECB’s self-imposed quiet period, the Dutch, French, German and Slovak central bank chiefs all said the governing council’s decision was still open.

New York

Wall Street shares were lower in early afternoon trading after stronger-than-expected services sector data fuelled concerns of sticky inflation and interest rates staying higher for longer, while a drop in shares of Apple further weighed down the indexes.

Shares in Apple were under pressure after a report said China had banned officials at central government agencies from using iPhones and other foreign-branded devices for work.

Other megacaps also declined, with Tesla, Amazon.com and Nvidia all in negative territory as the yield on the 10-year and the two-year treasury notes moved higher after the economic data.

Johnson & Johnson fell as HSBC initiated coverage on the healthcare conglomerate with a hold rating.

Lockheed Martin dropped after the US weapons maker trimmed the delivery outlook for its F-35 jets. – Additional reporting: Reuters