European equity markets dragged down by oil and tech stocks

European equities surrendered earlier gains to end lower on Thursday, with energy and technology shares declining the most amid ongoing concerns about central bank rate hikes and geopolitical uncertainty.

The Stoxx 600 index closed 0.7 per cent lower, extending losses to a third straight session. A slump in crude prices on demand worries pulled energy shares down 2.1 per cent.

Dublin

The Iseq overall index defied the wider European trend to rise 0.7 per cent to 6,933.96.

Banking stocks were among the main gainers, with AIB rising 3 per cent to €2.60 and Bank of Ireland advancing 5.9 per cent to €7.41, in line with a push higher by UK banks amid speciation that the Bank of England may increase its rates by 0.75 of a percentage point this month. Banks’ net interest income stand to benefit from rising rates. Morgan Stanley upgraded the banking sector to overweight, citing cheap valuations and resilient earnings.

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Elsewhere, Ryanair jumped 2.4 per cent to €12.47. Chief executive Michael O’Leary predicted on Thursday fares will have to rise by a small amount next year in order to cover the rising cost of fuel.

CRH rose 0.6 per cent to €35.62, while Kerry Group dipped 0.8 per cent to €96.32.

London

UK’s main stock index ended a volatile session flat as gains in banking and consumer stocks offset losses in energy shares.

After two sessions of sharp losses, the blue-chip FTSE 100 paused as banks rose 1.8 per cent on bets of a 70 per cent chance that the Bank of England would deliver a 75-basis-point interest rate hike on September 22nd. While data on Wednesday showed that inflation surprisingly fell in August, a Bank of England survey said the British public’s expectations for inflation over the coming year rose to a record high last month.

Homebuilders rebounded 3.7 per cent after losing more than 3 per cent in each of the last two sessions, as the sector braces for a tough market amid rising mortgage rates and a worsening cost-of-living crisis.

A slump in crude prices due to demand worries sent Shell down 1.1 per cent. The oil and gas behemoth named Wael Sawan, the head of its integrated gas and renewables division, as the new CEO to replace Ben van Beurden, who will step down at year-end.

Vodafone rose around 2 per cent after a media report said KKR & Co and Global Infrastructure Partners were among suitors for a stake in the group’s wireless towers unit Vantage Towers.

Europe

Technology stocks fell 1.8 per cent and were the biggest drags on the Stoxx 600. The sector typically underperforms in a high interest rate environment on concerns over pressure on future earnings.

Amid Western sanctions on Russia over its invasion of Ukraine, China said it would work with Moscow to “instil stability and positive energy in a chaotic world”. Worries of a gas crisis in Europe due to the war have seen the bloc’s leaders scramble to introduce support measures for companies and citizens.

Spanish banking stocks including Bankinter, Sabadell and Caixabank rose more than 4 per cent each after a report stated that Madrid is keen to avoid conflicts with the European Central Bank and could modify a bank tax.

H&M dipped 4.7 per cent after the retailer posted lower-than-expected quarterly sales as shoppers tightened their belts amid soaring energy and food bills and as it struggled to compete with rival Zara.

New York

Wall Street’s main indexes were lower in early afternoon trading, with technology and growth stocks leading the way as a slew of economic data pointed to resilience in the US economy which could keep the Federal Reserve on track for aggressive interest rate hikes.

Apple, Microsoft and Alphabet fell. However, Netflix gained as Evercore ISI upgraded the stock to outperform.

Healthcare stocks got a boost from health insurer Humana’s strong earnings forecast.

Adobe slumped after the Photoshop maker said it would buy Figma in a cash-and-stock deal that valued the online design start-up at about $20 billion (€19.98bn). – Additional reporting, Reuters.