European shares slip amid fears interest rate hike cycle could persist

European shares fell on Monday, as fears that the global interest rate-hiking cycle could persist for longer than previously expected weighed on rate-sensitive technology and real estate shares.

Nearly all sector indices were in the red, with real-estate and technology stocks among those bearing the brunt of selling pressure and down about 2 per cent each, and retail stocks also declining.

Dublin

The Iseq slipped 0.7 per cent in bank holiday trading. Building materials group CRH declined 1 per cent to €43.36, while insulation maker Kingspan also fell, ending the session down 0.8 per cent at €64.28.

Flutter Entertainment dropped 2 per cent to €145.25, while food group Kerry nudged down 0.2 per cent to €88.00.

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But it was a better day for Ryanair, which edged almost 0.4 per cent higher to €15.30.

London

The UK’s FTSE 100 closed lower, as upbeat US economic data last week sparked fears of further monetary tightening and as a top Bank of England official voiced concerns that rates need to stay higher for longer.

The blue-chip FTSE 100 fell 0.8 per cent after briefly hitting a new record high in the previous session, while the domestically-focused FTSE 250 recorded a near 1 per cent drop after climbing to an eight-month peak last week. Nearly all big sectors finished in the red, but precious metal miners eked out a meagre rise of 0.7 per cent.

China-exposed financial services firm Prudential fell nearly 5 per cent on concerns around elevated US-China geopolitical tensions.

Hargreaves Lansdown fell 3.3 per cent after Credit Suisse downgraded the wealth manager’s shares to “underperform” from “neutral”.

Europe

The pan-European STOXX 600 closed down 0.8 per cent, pulling back from a nine-month high it hit on Friday on optimism about the euro zone economy.

Stockholm-listed real estate firms Fabege and Fastighets AB Balder were the top percentage decliners, falling 8.7 per cent and 7.2 per cent respectively.

Concerns around elevated geopolitical tensions between the US and China also weighed on sentiment, with China-exposed luxury goods makers Hermes International, LVMH and Kering falling between 1.8 per cent and 3.8 per cent.

Germany’s DAX index fell 0.8 per cent. Industrial orders in Europe’s largest economy beat forecasts in December. In France, the Cac 40 slid 1.3 per cent.

Eurazeo fell 2 per cent after Reuters reported that the French investment firm has ousted its chief executive and named a new executive board following a row with the group’s number one shareholder.

Meanwhile, Santander fell 1.5 per cent as a Madrid court ruled that the Spanish bank’s offer letter to Andrea Orcel making him chief executive was a binding contract.

Banco BPM, Italy’s third-largest bank, gained 2.7 per cent on plans to generate greater value longer-term from its retailers’ payment business as it explores strategic options for the unit.

New York

US stock indexes edged lower in early trading on Monday with Tyson Foods falling on disappointing quarterly results, while investors reassessed their predictions on when the US Federal Reserve would start cutting rates. The non-farm payrolls report on Friday that showed the US economy added jobs at a rapid pace spooked investors.

Tyson Foods slipped 5.8 per cent after missing analysts’ estimates for quarterly revenue and profit.

Tesla bucked the overall trend with a 1.3 per cent gain after a US jury on Friday found chief executive Elon Musk and his company were not liable for misleading investors when Musk tweeted in 2018 that he had “funding secured” to take the electric-vehicle maker private.

US-listed Chinese stocks such as Pinduoduo and Baidu slid 4.9 per cent and 3 per cent respectively on geopolitical concerns after a US military fighter jet shot down a suspected Chinese spy balloon off the coast of South Carolina on Saturday.

Additional reporting: Reuters.