Global stocks fall as Fed prepares to unwind crisis stimulus

Stocks continued to push lower around the globe on Tuesday as the Federal Reserve in the US prepared to unwind its crisis-era stimulus, prompting a recalibration of bond yields.

DUBLIN

There was “red across the board” according to one trader on Tuesday as Euronext Dublin sank 2 per cent.

The same trader cited a “global market rout” as US Treasuries extended their sell-off into a fourth day, with the 10-year yield reaching a level last seen in mid-June, and inflation expectations rising.

Ryanair was down 2 per cent despite bullish projections from chief executive Michael O'Leary in relation to passenger numbers. "Ryanair had been making statements about passenger numbers and overall strong demand, but the stock got caught up in the rout," said a trader.

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Dalata, the largest hotel operator in the State, was up 2 per cent on the day. "It was a standout performer that didn't get caught up in the rout for whatever reason," said a trader. "It was very much an anomaly versus most of the peer names."

Most of the construction names were also down about 2 per cent. Those included building materials group CRH, Woodies parent Grafton Group and insulation specialist Kingspan.

Among the property names, Cairn Homes and Glenveagh Properties were a little more resilient, down 80 basis points and 1.5 per cent respectively. In the food names, Glanbia was down 3 per cent.

LONDON

London's blue-chip Ftse 100 index ended lower, dragged down by heavyweight house builders and financial stocks, while the technology company Smiths Group topped the index after delivering strong annual earnings.

The Ftse 100 index eased 0.5 per cent, with the house builder index and financials leading declines.

The domestic-focused mid-cap index dropped 1.7 per cent, recording its worst session in more than two months, with travel and leisure stocks among the top losers.

British software automation company Blue Prism Group dropped 4 per cent after agreeing to a takeover offer from American private equity firm Vista Equity Partners.

British online greetings card retailer Moonpig fell 5.1 per cent, despite raising its annual revenue forecast.

However, Smiths Group jumped 4.1 per cent after signing a binding agreement to sell its medical devices unit, Smiths Medical, and declaring a dividend of 26 pence after robust annual earnings.

EUROPE

European stocks sank to their lowest in a week as a surge in government bond yields knocked high-growth technology shares, with fresh signs of a slowdown in China’s economy weighing on investor sentiment.

The pan-European Stoxx 600 index was down 2.2 per cent, its biggest one-day decline in more than two months as a jump in US Treasury yields signalled that investors were bracing for higher rates and the risk of persistent inflation.

Technology stocks fell 4.8 per cent to hit their lowest in two months. They are particularly sensitive to rising interest rate expectations as their value rests heavily on future earnings, which are discounted more deeply when rates go up.

Germany’s Dax fell 2.1 per cent, while France’s Cac 40 was down 2.2 per cent.

Swiss computer peripherals maker Logitech slid 7.3 per cent as Morgan Stanley downgraded the stock to "underweight".

Dutch semiconductor supplier ASM International fell 3.8 per cent despite raising its third-quarter order intake guidance.

NEW YORK

The S&P 500 and the Nasdaq headed for their worst day in four months on Tuesday as weak consumer confidence data deepened concerns over slowing economic growth, while a surge in Treasury yields hit mega-cap technology stocks.

At 11.53am eastern time, the Dow Jones Industrial Average was down 1.48 per cent. The S&P 500 was down 1.98 per cent, while the Nasdaq Composite was down 2.73 per cent, both tracking their worst day since early May.

Shares of Apple, Microsoft, Amazon.com and Google-parent Alphabet dropped 2.9-4 per cent.

Among other stocks, Ford Motor Co rose 1.3 per cent after the US car maker and its Korean battery partner, SK Innovation, said they would invest $11.4 billion to build an electric F-150 assembly plant and three battery plants in the United States.