European shares retreated yesterday, with technology stocks leading losses in tandem with their US peers, while a swathe of middling local economic data fuelled bets on continued easy monetary policy.
The pan-European Stoxx 600 index shed 1.4 per cent after gaining as much as 1.3 per cent earlier in the day as the technology sector plummeted 3.8 per cent from a 19-year closing high.
The losses came in line with a 3.8 per cent drop in Wall Street’s tech-heavy Nasdaq index, triggered by high valuations and US jobless claims suggesting a stalling in the country’s labour market.
The Iseq index fell 1.2 per cent to 6,294.71 as Bank of Ireland and AIB rose 4.2 per cent and 5.8 per cent respectively as financials across Europe gained in anticipation of further European Central Bank (ECB) liquidity measures.
Ryanair traded marginally down at €11.65 a day after threatening to axe more routes in and out of Ireland if the Government did not loosen travel restrictions to curb the spread of Covid-19.
Swiss-Irish food company Aryzta climbed 3 per cent to 59 cent amid speculation it may be planning to sell off its underperforming US business as part of a restructuring of the group.
The baked goods specialist Aryzta has been struggling to halt a decline in earnings, particularly in the US, and negative investor sentiment towards its complex capital structure.
London shares closed lower as miners weighed down the FTSE 100 index after optimism about more stimulus proved to be short-lived, while shares of Melrose jumped after it signalled a pick-up in some markets.
The blue-chip FTSE 100 slipped 1.6 per cent, with miners tumbling 4 per cent, while the mid-cap index shed 1.3 per cent.
Turnaround specialist Melrose Industries jumped 12.5 per cent as it said there were signs of a pick-up in some of its markets, excluding aerospace, after the coronavirus crisis slashed its first-half profit by 90 per cent and prompted job cuts.
The European Central Bank is expected to follow the US Federal Reserve in keeping monetary policy easy.
"The easy policy for as long we can see is already something that's been priced in for a long time, and we've gone well beyond it. A moment of reckoning will come at some point," said Andrea Cicione, head of strategy at TS Lombard in London.
The selling spread to most other European sectors, with travel and leisure stocks among the few still trading positive.
A gauge of global stocks yesterday fell from a record high in its biggest one-day decline in nearly three months as the technology sector sold off, while the dollar continued its bounce from more than two-year lows. The S&P technology sector, up more than 35 per cent on the year as the best-performing of the 11 major sectors, dropped 5.83 per cent as investors fled expensive stocks that have pushed major averages higher.
The group contains some of the world's largest publicly traded companies. Investors have been concerned about the narrowing leadership of the market rally that pushed the S&P 500 up 60 per cent from its March 23 low through Wednesday, with gains on Wall Street largely driven by names such as Apple and Microsoft.
“There was this chase to get long and people are jealous of the gains that they were missing out on and they just poured in,” said Mike Zigmont, head of trading and research at Harvest Volatility Management in New York. “And eventually that behaviour exhausts itself and what we’re seeing is the exhaustion today.”
The Dow fell 808.17 points, or 2.78 per cent, to 28,292.33, the S&P 500 lost 125.84 points, or 3.51 per cent, to 3,455 and the Nasdaq dropped 598.34 points, or 4.96 per cent, to 11,458.10. – Additional reporting: Reuters