European shares hit hard by Chinese regulatory shake-up, US policy move

Falling commodity prices, regulatory shake-ups in China and signs that the United States may ease up on economic stimulus hit European shares hard on Thursday. Philip Byrne, deputy chief investments officer at Cantor Fitzgerald Ireland, blamed developments in China Europe's woes.

He noted that the US Federal Reserve’s signal that it may begin pulling back on economic stimulus was not surprising.

“People are thinking that tapering will start in November and December, at the margins, it’s probably not as aggressive it could have been,” he said.

Mr Byrne said people were concerned about the Delta variant’s impact on China, where the government has imposed some travel restrictions.

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At the same it announced cuts in steel production, a further rebalancing of its economy and moves to regulate luxury goods and the country's tech companies. "Those factors combined have really weighed on Europe, " Mr Byrne noted.

Dublin

Ryanair slid 3.2 per cent to €15.73 as airlines bore some of the fallout's brunt. Dealers said it was down 2 per cent most of the day before being sold "more aggressively" in later trade.

Building materials group CRH shed 1.49 per cent, in line with the market, to close at €43.54. Paddy Power owner, Flutter Entertainment, fell 2 per cent to €159.20, ending a strong run sparked by last week's good interim results.

Insulation specialist Kingspan retreated 1.96 per cent to €93.84. Its shares hit new highs recently while it is due to report interim figures on Friday.

Bank of Ireland closed 1.59 per cent down at €5.062. AIB edged up 0.4 per cent to €2.40 while Permanent TSB added 0.75 per cent to €1.35.

The Iseq as a whole finished 1.4 per cent lower.

London

London’s FTSE 100 ended sharply lower on Thursday as heavyweight mining and energy stocks tracked a slump in commodity prices on signs of slowing demand and economic growth amid fears of a quicker withdrawal of global monetary stimulus.

The blue-chip FTSE 100 index dropped 1.5 per cent to hit a three-week low while recording its worst single-day drop in a month, with energy stocks and industrial metal miners leading the decline.

Anglo American, BP, Royal Dutch Shell and Rio Tinto were the top drags after oil prices dropped for a sixth straight session to a three-month low with growth bellwether copper and iron-ore prices also recording their multi-month lows on demand worries.

Europe

European shares tumbled to their biggest daily loss in a month on Thursday as a slump in commodity prices dragged down mining stocks, while luxury stocks were hit by a Chinese wealth redistribution push.

The pan-European Stoxx 600 was down 1.6 per cent at a two-week low, with mining stocks sliding 4.2 per cent in their biggest one-day decline since March.

Luxury stocks with a large exposure to China's economy such as LVMH, Kering and Richemont dropped between 5.8 per cent and 9.2 per cent on Beijing's plans to target excessive corporate profits and wealth inequalities.

Banking stocks including Asia-focused HSBC, as well as Spain's BBVA and France's BNP Paribas fell about 3 per cent each.

The travel and leisure index declined 2.5 per cent as a surge in cases of the Delta variant added to concerns of slowing global growth and took the shine off a solid second-quarter corporate earnings season.

New York

Wall Street indexes were supported by gains in defensive and heavyweight technology stocks on Thursday afternoon, as investors fretted over when the Federal Reserve could begin tapering its massive stimulus programme. The Dow Jones retreated on losses in growth-sensitive sectors, while gains in major technology stocks kept the Nasdaq in positive territory.

Defensive sectors such as utilities and consumer staples were the best performers, while technology rose slightly. The S&P energy sector was the worst performer among its peers, as oil prices hit a three-month low, while the materials sector dropped after copper prices tumbled.

Data from the US Labor Department on Thursday showed weekly unemployment claims at a 17-month low, further supporting the view that a job market recovery was under way.

Macy's and Kohl's rose 17.7 per cent and 6.6 per cent, respectively, after they raised their annual outlook as increasing vaccination rates brought more US shoppers back to their stores. – Additional reporting: Reuters