View of the trading floor with display boards at the Frankfurt Stock Exchange. (is associated with: «European stocks down over geopolitical tensions, poor economic data») Hannes P Albert/dpa
European stocks closed weak on Tuesday, weighed down by concerns about inflation and interest rates as oil prices climbed higher and bond yields rose amid the ongoing conflict between Iran and the US Weak German retail sales data and a report showing an acceleration in eurozone inflation hurt as well.
Brent Crude futures climbed above $92.50 a barrel on Tuesday on fears of supply disruption due to the ongoing Middle East conflict. According to reports, Iran retaliated with attacks on the UAE and Jordan after US forces targeted an island in the Strait of Hormuz.
Germany’s 30-year government bond yield rose to a fresh 15-year high and that of France rose to its highest level since 2008, as traders assessed Middle East tensions.
US non-farm payrolls data, due later this week, is expected to provide some clues on the Federal Reserve’s rate trajectory.
Brent Crude futures climbed to $92.55 a barrel, gaining about 2.3%, amid rising Middle East tensions.
The European Central Bank (ECB), which is scheduled to meet next week, is likely raise its key interest rates by 25 basis points.
The pan-European Stoxx 600 dropped 0.84%. The UK’s FTSE 100 closed 1.12% down, Germany’s DAX ended with a loss of 1.26% and France’s CAC 40 drifted down 0.53%. Switzerland’s SMI closed 0.34% up.
Among other markets in Europe, Austria, Denmark, Finland, Greece, Iceland, Ireland, the Netherlands, Norway, Poland, Spain, Sweden and Turkey closed weak.
Portugal ended higher, while Belgium, the Czech Republic and Russia closed flat.
In the UK market, miners were among the major losers. Endeavour Mining, Antofagasta and Fresnillo lost 5.4%, 5.2% and 4.9%, respectively. Anglo-American Plc ended down 3.7% and Rio Tinto closed lower by 1.2%, while Glencore settled with a modest gain of 0.25%.
Weir, Rolls-Royce Holdings, Autotrader Group, Intercontinental Hotels Group, Melrose Industries, ICG, IAG, JD Sports Fashion, Babcock International, Polar Capital Technology Trust, Whitbread, Computacenter, Croda International, Aberdeen Group and Spirax Group lost 2.8%-5%. Barclays shed about 2.1%.
WPP drifted lower after announcing plans to eliminate up to 1,000 additional positions by the end of the year.
Ashtead Technology Holdings dropped more than 4% after the subsea equipment rental specialist reported a 7 percent fall in first-half EBITA earnings.
Energy stocks BP and Shell moved up 5.2% and 2.7%, respectively, riding on higher oil prices.
Reckitt Benckiser climbed nearly 4.5%. Rentokil Initial, Tesco, Airtel Africa, Hiscox, British American Tobacco, GSK, Convatec Group, Imperial Brands, Sainsbury (J), Vodafone Group and Unilever ended with sharp to moderate gains.
In the German market, SAP, Rheinmetall, Siemens, MTU Aero Engines, Adidas, Beiersdorf, Scout24, Zalando, Deutsche Börse, Volkswagen, Infineon, BMW, Fresenius and Deutsche Post ended down by 1%-3.5%.
Munich RE, Merck, Hannover RE, Siemens Healthineers and Qiagen closed with moderate gains.
In the French market, STMicroelectronics, Pernod Ricard, Kering, Stellantis, Dassault Systèmes, Hermes International, Renault, Saint-Gobain, Schneider Electric and Thales shed 2%-3.1%.
LVMH, Accor, Safran, Legrand, L’Oréal, Publicis Groupe and Eurofins Scientific also ended notably lower.
Air Liquide, Teleperformance, TotalEnergies, Carrefour and AXA closed on firm note.
In economic news, Data from S&P Global showed the S&P Global Germany Manufacturing PMI was revised slightly higher to 54.3 in August from a preliminary of 54.1, compared to 52.2 in July. The reading showed that factory growth improved for a third straight month, reaching its strongest level since May 2022.
Data released by Destatis showed Germany’s retail sales declined unexpectedly in July, falling 3.4%, on weaker food and non-food store sales. Retail sales remained flat in June. Sales were expected to rise 0.4% in July.
On an annual basis, retail sales dropped 2.5%, in contrast to the 0.6% increase in June.
Eurozone inflation accelerated to the highest level in nearly three years in August, reinforcing expectations for an interest rate hike at the European Central Bank’s meeting next week. Inflation advanced to 3.3% in August, as expected, from 2.9% in July, flash data from Eurostat revealed. The rate was the highest since September 2023 when inflation was 4.4%.
Data from S&P Global showed the S&P Global France Manufacturing PMI rose to 51.1 in August from 51.5 in the preliminary estimate and 49.8 in July, signalling renewed growth in factory activity.
Eurozone inflation accelerated to the highest level in nearly three years in August, reinforcing expectations for an interest rate hike at the European Central Bank’s meeting next week. Inflation advanced to 3.3% in August, as expected, from 2.9 % in July, flash data from Eurostat revealed. The rate was the highest since September 2023 when inflation was 4.4%.
The euro area unemployment rate remained unchanged in July, Eurostat reported on Tuesday. The jobless rate stood at 6.4% in July, unchanged from June. In the same period last year, the unemployment rate was 6.3%.
Data from S&P Global showed the S&P Global UK Manufacturing PMI eased to 51.7 in August from 51.9 in the previous month, the lowest in five months, but revised higher from the flash estimate of 51.5.
Data from the Nationwide Building Society showed house prices in UK grew 1.6% on an annual basis, faster than the 1.4% rise in July but weaker than economists’ forecast of 2%. Month-on-month, house prices gained 0.2%, in contrast to the 0.1% fall in July.
A report from British Retail Consortium showed UK shop price inflation accelerated to 1.5% year-on-year in August from 0.9% in July, reaching its highest level since February 2024. Food inflation climbed to a four-month high of 2.8% from 2.2%, with particular pressure on ambient foods that are typically imported and processed. Meanwhile, non-food inflation rose sharply to 0.9% from 0.2%, also the highest since February 2024.
