European stocks slumped to a three-week low on Tuesday, clocking their worst session in nearly two months, as a resurgence in Covid-19 cases raised fears of tighter restrictions, while energy stocks and miners rose on higher commodity prices. The pan-European Stoxx 600 shed 1.3 per cent, with only the oil and gas and basic resources sectors trading higher. Tech stocks in Europe tumbled 3.4 per cent, marking its biggest one-day percentage fall in two months, as prospects of rising interest rates dented the appeal of the high-growth sector. US president Joe Biden tapped Jerome Powell on Monday to continue as Federal Reserve chair, lifting bets of US rate hikes in 2022. Money market traders have now fully priced in a 10-basis-point rate hike by the European Central Bank in December 2022, up from 50 per cent odds on Monday. Growing nerves around a fourth wave of Covid-19 infections stalling European recovery at a time when central banks are planning the withdrawal of monetary support have also pulled investors out of equities.
CRH rose 3.4 per cent to €45 after the buiding materials firm said it was on track to report record full-year earnings amid strong demand on both sides of the Atlantic, with the group managing to offset rising input cost through price increases for its products. The Dublin-based company expects to post full-year earnings before interest tax, depreciation and amortisation (ebitda) of $5.25 billion (€4.67 billion), it said in a trading statement on Tuesday.
AIB fell 2 per cent to €2.14 after it confirmed the sale of its £600 million British small-business loan book to London-based challenger lender Allica Bank. The bank said the sale is part of its previously announced Strategic Transformation Programme. The transaction will lead to 300 job losses, sources said.
Amid rising Covid cases and the prospect of further restrictions, the State's largest hotel chain Dalata fell 3 per cent to €3.69. Paddy Power Betfair owner Flutter fell 2.6 per cent to €131.45 while Permanent TSB rose 2 per cent to €1.60.
The Euro Stoxx 50 volatility index, Europe's main gauge of stock market anxiety, touched its highest level in almost seven weeks. "One-off events or company-related headline news, such as with Telecom Italia yesterday, cannot last for too long, or overshadow concern around increasing Covid cases, new lockdown measures, and growth in European economies," said Charalambos Pissouros, head of research at JFD Group. Travel stocks slipped 1.8 per cent after the United States issued an advisory against movement to Germany and Denmark due to rising Covid-19 cases there. Thyssenkrupp fell 6.1 per cent after Swedish activist fund Cevian nearly halved its stake in the German conglomerate. British online electricals retailer AO World slipped 14.4 per cent after trimming its fiscal 2022 profit outlook, citing supply chain issues. Dutch financial services company Intertrust surged 15.4 per cent to its highest in over five years after saying it had received multiple takeover offers.
The FTSE 100 upstaged its European counterparts after a rebound in oil prices helped to boost shares in BP and Shell. The oil majors and London's mining firms were among the day's strongest performers after both crude and iron ore saw upticks in value. Michael Hewson, chief market analyst at CMC Markets UK, said: "European markets have seen a rather mixed session, with the FTSE 100 outperforming on the back of a recovery in the oil price, which is supporting the oil majors, while a rise in iron ore prices is helping to support the miners, with Rio Tinto and BHP both higher. "
In company news, Compass led London’s top flight after it posted profits for the full-year which surpassed expectations. The world’s biggest caterer saw pre-tax profits more than double to £464 million in the year to September 30th from £210 million the previous year.
The Nasdaq lagged its Wall Street peers on Tuesday as rising Treasury yields weighed on major technology stocks, while gains in banks and energy helped limit losses in the S&P 500 and the Dow Jones. The S&P tech sub-index sank 1.2 per cent as rising yields dented appeal of the high-growth sector. Tesla and Microsoft were the worst performers among trillion-dollar tech firms, falling 3.2 per cent and 1.4 per cent, respectively.
Among other stocks, Zoom Video Communications fell 18.6 per cent after its third-quarter revenue growth rate slowed to 35 per cent as demand for its video-conferencing tools eased from pandemic-fueled heights last year. Best Buy slid 14.5 per cent after the electronics retailer forecast fourth-quarter comparable sales below expectations due to supply chain issues. - Additional reporting Reuters