Markets get jittery over Covid and interest rate rises

Retailers struggle as data shows British retail sales volumes fell more than expected

European shares closed near one-month lows on Friday as a cocktail of negative factors from China’s Covid lockdowns to worries about rapid interest rate hikes subdued sentiment globally.

Broadly, world stocks hit five-week lows as investors feared that rapid interest rate hikes in the United States, Britain and the euro zone in the face of surging inflation would weigh on economic growth.

Dublin

The Irish index of shares closed almost 1.5 per cent lower on Friday, following the broader trend seen in the global markets.

Banking stocks were mixed, with Bank of Ireland gaining 3.3 per cent to end the day at €6.77, while AIB was marginally lower at €2.08.

Dalata Hotel Group fell almost 2 per cent over the session, closing at €4.08. Shares in airline Ryanair were off almost 4 per cent at €14.65. A three-day cabin crew strike prompted the airline to cancel some flights from Belgian airports this weekend.

Elsewhere, Smurfit Kappa closed at €39.55, down 1.9 per cent, while CRH was 2 per cent off at €38.38.

London

The blue-chip FTSE 100 index closed 1.4 per cent lower and the domestically-focused mid-cap FTSE 250 index declined 1.3 per cent.

Retailers tumbled 2.5 per cent as data showed British retail sales volumes fell more than expected in March from February, while consumer confidence approached all-time lows in April, hit by surging inflation.

Banks, life insurers and miners fell between 2.2 per cent and 3.0 per cent, and weighed on the blue-chip index. The FTSE 100 recorded a weekly dip of more than 1 per cent.

B&M dropped 6.1 per cent after the discount retailer said its chief executive, Simon Arora, planned to retire next year after more than 17 years leading the business.

Berkeley Group rose 0.4 per cent after Jefferies upgraded the homebuilder's stock to "buy" from "hold". HomeServe jumped 14.9 per cent after it said it was in talks with Canada's Brookfield Asset Management for a possible offer for the home repair services firm.

Europe

The pan-European Stoxx 600 shed 1.8 per cent to 453.43 – its weakest finish since March 25th.

The basic resources sector, which houses global miners such as Glencore and Rio Tinto, tumbled 3.6 per cent as metal prices took a hit from lockdowns in top metals consumer China.

Focus was also on France’s presidential run-off vote on Sunday, where President Emmanuel Macron has possibly extended his lead over far-right challenger Marine Le Pen. France’s CAC 40 closed 2 per cent lower, along with the broad sell-off but outperformed on a weekly basis on expectations that Mr Macron would win his re-election bid.

There were some earnings disappointments too. Kering fell 4.3 per cent after posting downbeat sales at its crown jewel Gucci, hurt by lockdowns in China.

Germany's SAP lost 2 per cent after flagging a revenue hit of €300 million from its Russia exit.

Swedish hygiene and health company Essity jumped 13.3 per cent after first-quarter earnings exceeded expectations.

New York

US stocks fell as disappointing corporate results and prospects for aggressive interest-rate hikes weighed on sentiment.

The S&P 500 slid more than 1 per cent with all 11 industry groups in the red. The tech-heavy Nasdaq 100 traded near lows of the day. Meanwhile, the market’s so-called fear gauge – the Cboe Volatility Index or VIX – jumped to a one-month high.

Treasuries were mixed, with the yield on the policy-sensitive two-year note rising five basis points. The dollar rose to the highest level since June 2020.

Among corporate earnings, Verizon Communications had its biggest drop in two years after cutting its full-year sales forecast. American Express fell after the credit-card giant reported that expenses jumped in the first quarter.

The healthcare sector led losses in the S&P 500, with HCA Healthcare sinking after cutting its forecast on labour costs. Intuitive Surgical tumbled after its systems placements disappointed some analysts even as revenue beat estimates. – Additional reporting: Reuters, Bloomberg