European utilities stocks stood out as a rare bright spot in an otherwise weaker market, as followers of the sector cheered EU plans to control spiking wholesale power prices.
The European Commission plans to propose a raft of measures that include a levy on fossil-fuel producers, a price cap on Russian gas imports, measures to increase liquidity for energy companies if needed and a mandatory target reduction of electricity use.
The EU’s action “might remove uncertainty for the sector and make it sustainable for consumers again,” said Fernando Garcia, director for European utilities equity research at RBC Capital Markets.
However, the broader market, measured by the pan-European Stoxx 600 index, declined 0.6 per cent, following on from marginal gains in the previous session, as investors braced themselves in advance of the European Central Bank’s monetary policy meeting on Thursday.
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DUBLIN
The Iseq index edged 0.3 per cent higher to 6,880.25. Banks were mixed, with AIB adding 0.8 per cent to €2.33, while Bank of Ireland lost 2.6 per cent to €6.15.
While banks’ lending margins stand to benefit from rising interest rates — with the debate in the market focused on whether the ECB will hike its main rates by half or three-quarters of a percentage point — there continues to be fears about what aggressive hikes may do to the economy.
Malin Corp, the life sciences investment company, added 0.7 per cent to €4.56, as it said that its equity value per share jumped by 21 per cent over the summer months as the value of its holding companies rose.
Molten Ventures was also in focus — dipping almost 4 per cent to €4.90 — after the venture capital firm said it had refinanced an existing £65 million (€75m) credit facility with a new £150 million financing line.
LONDON
The UK’s FTSE 100 index fell 0.9 per cent as weak oil and metal prices pressured commodity-linked stocks, while worries over a possible recession and aggressive monetary policy tightening in major economies also weighed on sentiment.
New UK prime minister Liz Truss said she would set out plans to tackle soaring energy bills but would not impose a new windfall tax on energy producers. Shares of oil majors BP and Shell slipped 2 per cent and 1.4 per cent as oil prices fell more than 4 per cent to their lowest since Russia invaded Ukraine on demand fears stoked by looming recession risks and downbeat Chinese trade data.
Shares of AstraZeneca slid 1.1 per cent as Morgan Stanley cut the drugmaker’s rating to equal-weight from overweight.
EUROPE
The Stoxx 600 Utilities Index climbed 2.4 per cent, making it the only sector gaining ground on Wednesday. RWE, SSE and Energias de Portugal added more than 4 per cent.
Shares in Ubisoft tumbled 17.2 per cent after it announced a deal that will see China’s Tencent Holdings raise its stake in the company, a move seen as a signal that a full sale of the French game maker is now very unlikely.
H&M slipped 2.3 per cent after JP Morgan downgraded the Swedish fashion retailer’s stock to underweight from neutral.
NEW YORK
US stock indexes were ahead in early afternoon trading following a recent sell-off, as bond yields eased while investor focus was squarely on the Federal Reserve’s monetary policy tightening plans.
The technology-heavy Nasdaq led gains among the main indexes. Apple inched higher in advance of the release of its new range of iPhone models and watches.
US stocks have sold off sharply since mid-August after hawkish comments from Fed chair Jerome Powell were compounded by signs of an economic slowdown in Europe and China and aggressive steps by major central banks to tame inflation.
Data signalling strength in the US economy has prompted traders to bet on a 75-basis-point interest rate hike by the Fed later this month.
Nio fell in New York after the Chinese electric vehicle maker reported a bigger second-quarter adjusted net loss.
Coupa Software jumped after the payment management software firm beat second-quarter estimates for revenue and profit.
-Additional reporting, Reuters, Bloomberg
