Investors fret over banks and slowing global growth

US stocks fell the most in a month amid tepid consumer spending data and oil’s plunge

Traders work at their desks in front of the German share price index, DAX board, at the stock exchange in Frankfurt. Reuters

Traders work at their desks in front of the German share price index, DAX board, at the stock exchange in Frankfurt. Reuters

 

European shares slid to a three-week low on Tuesday as some major companies reported poor results and the continent’s financial sector took a continued battering following last week’s stress tests.

US stocks also fell the most in a month amid tepid consumer spending data, as oil’s plunge into a bear market and the European banking woes added to global to growth concerns.

Losses in banks and commodity producers also dragged down British equities, which posted their biggest two-day drops since the the nation voted to leave the European Union.

Dublin

Trading volumes were slim following the bank holiday weekend, although the Iseq still fell by about 1.4 per cent, weighed down by a poor performances from some of Ireland’s home-grown blue-chip stocks. CRH was down almost 1.9 per cent while Smurfit Kappa fell by close to 0.9 per cent.

Bank of Ireland led the fallers, down more than 8.6 per cent after it was hammered in the afternoon session. It recovered some ground in after hours dealing to be down just over 6 per cent at 16.2 cent. The stock is down close to 15 per cent since before the weekend. PTSB is off by about 2.3 per cent since before the weekend.

Dalata, the hotel group that trades predominantly as Maldron, was up by more than 1 per cent, as results from industry peer IHC showed encouraging signs for the UKL regional hotel market. Dalata has a presence in secondary UK cities.

Datalex, an airline retailing software company, was down by 2.35 per cent, as worries over global growth permeated the wider hospitality and tourism sector.

London

The FTSE 100 Index retreated 0.7 per cent, taking its slide for the past two days to 1.2 per cent and closing at its lowest level in almost a month.

Barclays fell 3.6 per cent and BHP Billiton dropped 2.7 per cent, while Royal Dutch Shell Plc shares lost 2.1 per cent as oil entered a bear market. Shares in the oil major also dropped after HSBC cut its price target on the stock while Liberum analysts downgraded Shell to “hold” from “buy”.

Direct Line Insurance Group jumped 13 per cent after the insurer increased its dividend and announced a special payout.

InterContinental Hotels Group Plc climbed 3 per cent after reporting an increase in first-half earnings. Shire added 2.4 per cent as it said its takeover of Baxalta will boost earnings and sales this year.

Precious metals miners climbed, with Fresnillo up 1.7 per cent after raising its gold output forecast following a surge in profit.

Europe

Italy’s Monte dei Paschi fell 16 per cent, leading bank losers in Europe and also ending at its lowest point ever. Credit Suisse fell 6.2 per cent and Deutsche Bank 4.8 per cent at its lowest closing level ever. he two banks will be dropped from the STOXX Europe 50 index next week, a further blow to the embattled sector.

Commerzbank fell 9.2 per cent after saying its profits would suffer because businesses are borrowing less and negative interest rates are hurting revenue.

In addition, investors are worried about its capital position after last week’s European Union bank stress tests. Commerzbank was one of the 12 weakest banks among the 51 tested by the European Banking Authority.

German retailer Metro slumped 8.7 per cent after reporting an unexpected loss for its fiscal third quarter, caused largely by restructuring costs at its wholesale business in Germany.

Infineon, whose chips activate car airbags and enable cruise control, fell 4.9 per cent. Its profit and sales missed predictions as demand weakened at its power management and card payments businesses.

New York

Heading into the afternoon session, shares of Ford and General Motors dropped about 3.5 per cent each after the two major US automakers reported July vehicle sales slightly below expectations.

The stocks dragged down the S&P consumer discretionary index by 1.4 per cent, making it the biggest loser among the 10 major S&P indexes.

Apple’s 1.6 per cent fall was the biggest drag on S&P 500 and the Nasdaq. The information technology index dropped 0.84 per cent.

Pfizer, the largest US drugmaker, maintained its full-year forecast, despite reporting revenue and profit above analysts’ estimates, sending its shares down 2.3 per cent to $36.44. The stock was the top percentage loser on the Dow.

CVS jumped nearly 5 percent after the drugstore chain operator’s quarterly profit beat estimates.

(Additional reporting: Bloomberg/Reuters)