EUROPE TRADED RED ON WEDNESDAY
European stocks tumbled more than 1% on Wednesday as a surge in oil prices intensified concerns over higher inflation, while investors moved out of high-growth tech stocks into banking shares. After a late-session rally on Tuesday, the pan-European STOXX 600 index fell 1.2%, with the tech sector down more than 2%.Banks slipped 0.1%, but were the smallest decliners on prospects of higher interest rates, as bond yields climbed and oil prices hit multi-year highs.
The FTSE 100 traded close to a 2-week low on Wednesday, amid rising government bond yields, with the UK 10 year bond yield jumping to levels not seen since 2019, as soaring energy prices strengthened the case for tighter monetary policies. According to the British Chamber of Commerce, a record 60% of goods producers said to consider raising customer charges as supply chain issues and staffing shortages pressured input prices. On the earnings front, supermarket chain Tesco showed a 1H 21/22 earnings soared 163.5% from last year to 10.7 pence per share, as operating profits jumped 29.5% and revenues climbed 5.9%. The latest results led the company to raise its full-year profit expectations, which now see operating profits between £2.5 billion and £2.6 billion.
The DAX 40 slipped more than 2% to a 14,870 on Wednesday, a level not seen since last May, amid a global rout in equity securities due to rising government bonds yields. Government bond yields increased to multi-month highs as traders saw soaring energy prices as another inflationary factor that could push the US Fed to begin tapering. At the same time, Germany’s factory orders fell a more-than-expected 7.7%, weighed down by lower export orders. On the corporate side, Deutsche Telekom slumped more than 5% after Goldman Sachs sold roughly 90 million of its shares for €1.58 billion. Meanwhile, Airbus reached a deal with Malaysia’s AirAsia to restructure an order for 362 airplanes of the A321neo model. The pan-European Stoxx 600 slid 1.7%, the French CAC 40 erased 2%, and the Italian FTSE-MIB was down by 2.1%.
The CAC 40 fell more than 2% to around 6,430 on Wednesday, its lowest since July 20th, in line with its European peers, as investors digested concerns over growing inflationary pressure that could force major central banks to act soon, as well as financial turmoil in China's property sector. Among single stocks, Unibail Rodamco, Stellantis and Renault were leading the losses.
The FTSE MIB was down to below the 25,500 level on Wednesday, hoovering at two-weeks low, and in line with its European peers. Ongoing concerns over slowing global activity and rising inflation triggered a rally in government bonds, with Italy's 10-year government bond yield rising to around 4-month highs of 0.915%. On the corporate front, Atlantia (-3.2%), Exor (-2.9%), and Prysmian (-2.9%) led the daily falls.
HOT STOCKS OF THE DAY
Few stock made news likes of UK’s HSBC and Germany’s Commerzbank were up more than 1% each. Deutsche Telekom fell 4.1% after Goldman Sachs sold shares worth 1.58 billion euros ($1.83 billion) in a SoftBank structured finance deal. Bayer AG rose 0.7% after the German agricultural and pharmaceuticals firm won its first trial over claims its Roundup weedkiller causes cancer. Tesco jumped 4.5% as Britain’s biggest retailer raised its full-year outlook and launched a 500-million-pound share buyback programme.
