European shares slide amid recession worries

European shares slipped on Monday after data showing a decline in euro zone business activity fanned recession fears, while hopes of easing of stringent Covid-19 curbs in China boosted miners and other China-exposed equities.

Dublin

The Irish index of shares closed marginally lower, ending the session off 0.3 per cent.

The index was supported by a rise in banking shares, with AIB up 2.2 per cent to €3.58, and Bank of Ireland closing at €7.79, rising 2.23 per cent. Ryanair rose 0.4 per cent. Earlier in the day Central Bank governor Gabriel Makhlouf said the European Central Bank is likely to raise interest rates by 50 basis points next week on the way to potentially moving beyond a deposit rate of 3 per cent amid ongoing inflationary concerns.

Those gains throughout the day were offset by declines elsewhere in the market. Shares in packaging company Smurfit Kappa fell 0.77 per cent. Building materials group Kingspan fell 2.1 per cent to €54.90, while CRH fell under 1 per cent to close the session at €38.04.

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Food stocks also inched lower, with Glanbia losing 1.5 per cent over the day to end the day at €11.56, while Kerry was relatively static at €89.10, shedding 0.31 per cent.

London

The FTSE outperformed its European rivals on Monday as the markets considered the tentative moves from China towards reopening its economy. Commodity and financial stocks in London benefited during a broadly cautious session, although the top index finished below intraday highs after Wall Street opened for trading. The FTSE 100 finished the day up 11.31 points, or 0.15 per cent, at 7,567.54.

In company news Vodafone inched lower as it revealed boss Nick Read will step down at the end of the year just weeks after unveiling an £880 million plan to slash costs and warning over job cuts. Mr Read will leave on December 31st after four years as group chief executive.

Drinks firm AG Barr made gains after it bought energy drink business Boost in a deal worth up to £32 million (€37.1m). The Irn-Bru maker closed 33p higher at 538p.

Cineworld improved in value after it told Bloomberg it intends to emerge from bankruptcy intact following reports rival Vue was considering a takeover move for the troubled firm. It was up 0.095p at 4.895p.

Europe

The region-wide STOXX 600 closed 0.4 per cent down. Data on Monday showed euro zone business activity declined for a fifth month in November, suggesting the economy was sliding into a mild recession.

Most of the STOXX 600 sectors were in the red, with rate-sensitive technology stocks and consumer staples such as Nestle and L’Oreal being the biggest drag on the index.

Credit Suisse gained 2.9 per cent. Investors, including Saudi Arabia’s crown prince and a US private-equity firm run by a former Barclays chief executive, have shown interest in investing $1 billion or more in Credit Suisse’s new investment banking unit, the Wall Street Journal reported on Sunday.

New York

Wall Street’s main indexes fell after better-than expected service-sector activity added to jitters that the US Federal Reserve might continue on its aggressive policy tightening path despite fears of a recession next year.

Investors see an 89 per cent chance that the US central bank will increase interest rates by 50 basis points next week, with the rates peaking in May 2023.

At 10.33am in New York the Dow Jones Industrial Average was down 239.71 points, or 0.70 per cent, at 34,190.17, the S&P 500 was down 39.93 points, or 0.98 per cent, at 4,031.77, and the Nasdaq Composite was down 128.11 points, or 1.12 per cent, at 11,333.39.

Tesla fell 4.7 per cent on the electric-vehicle maker’s plans to cut December output of the Model Y at its Shanghai plant by more than 20 per cent from the previous month.

Financials were among the biggest S&P sectoral losers, down 1.4 per cent. On the other hand, energy shares outperformed, up 0.1 per cent, tracking volatile crude prices. – Additional reporting: Reuters, PA

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