European stocks slide amid inflation fears

Rapid rise in US inflation sparks overnight sell-off on Wall Street

Photograph: iStock

Photograph: iStock

 

European stocks slid on Thursday, tracking an overnight selloff on Wall Street, as a rapid rise in US inflation spooked investors, while a drop in commodity prices weighed on heavyweight miners.

The pan-European Stoxx 600 index fell 1.6 per cent, drifting further away from an all-time high.

Basic resources and oil and gas sectors , among recent market leaders on the back of a surge in commodity prices, fell about 3 per cent.

Automakers also shed more then 3 per cent, while defensive names like healthcare and telecoms posted small losses.

The US benchmark S&P 500 stock index suffered its biggest one-day percentage drop since February on Wednesday after a surge in April consumer prices raised concerns that the Federal Reserve would raise interest rate earlier than expected.

“The debate as to what the Fed will do will continue, and we’ve seen in terms of the market that after economic growth peaks, there tends to be a lull for six months or so,” said Frederique Carrier, head of investment strategy at RBC Wealth Management.

“We think that returns are going to be modest at best over the next six months. Market could go sideways and there could be more volatility.”

European stocks have rallied to all-time highs this month, with the Stoxx 600 up almost 10 per cent so far this year as economic recovery prospects and strong earnings drew buyers of equities.

British luxury brand Burberry tumbled 7.9 per cent on reporting a 10 per cent drop in annual sales, weighed down by the Covid-19 pandemic.

UK’s biggest broadband and mobile provider, BT Group, fell 4.8 per cent as it reported a 7 per cent fall in revenue and a 6 per cent fall in adjusted earnings for the full year.

In another disappointing London stock market debut, shares of Canadian chip company Alphawave plunged by as much as 18 per cent.

Among the few bright spots was Spanish telecoms group Telefonica, which rose 3.7 per cent after it posted first-quarter core earnings broadly in line with forecasts.

Markets in Denmark, Finland, Norway, Sweden and Switzerland were closed for public holiday. – Reuters