European shares fall as investors fret about runaway inflation

European stocks declined on Wednesday as investors fretted about new inflation data, the prospect of further interest rate increases and a mixed batch of earnings reports.

Euro zone consumer inflation for September was revised marginally lower to 9.9 per cent from 10 per cent, but was still at a record high, underlining market expectations of more interest rate rises before the end of the year.

UK inflation, meanwhile, hit 10.1 per cent in September, matching the 40-year high touched in July and putting more pressure on the Bank of England to step up interest rate hikes to rein in surging prices.

Dublin

The Iseq fell 1.1 per cent as Irish stocks were caught up in the souring mood across European markets. Flutter Entertainment, which dropped 3 per cent on its FTSE listing in London as several consumer stocks took a battering, also declined on its Irish listing, finishing almost 3.2 per cent lower at €121.05.

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Food stocks Glanbia and Kerry were both down, with Glanbia slipping 2.3 per cent to €11.76 and Kerry closing 1.4 per cent lower at €88.96. Packaging company Smurfit Kappa declined 2.1 per cent to €32.24, while Bank of Ireland slid 2.5 per cent to €7.40 and insulation-maker Kingspan lost 2.3 per cent to finish at €49.83.

Ryanair was among the stocks to end the session in positive territory, up 0.1 per cent at €11.42, while AIB added 2.6 per cent to close just below €2.92.

London

The blue-chip FTSE 100 index slipped 0.2 per cent as inflation data showed the biggest jump in food prices since 1980, dealing a fresh blow to households grappling with the cost-of-living crisis.

Banks, down 0.3 per cent, also dragged the index lower after a media report said UK chancellor Jeremy Hunt was preparing to raid their profits as the government seeks new sources of cash to shore up its finances.

The domestically exposed FTSE 250 index dropped 1.6 per cent after closing at a near two-week high in the previous session.

Online fashion retailer ASOS jumped 12.2 per cent after it vowed to overhaul its business model. The economic slowdown combined with a string of operational problems has been hammering its profits.

Europe

The region-wide STOXX 600 index ended 0.5 per cent lower, snapping a four-day rally that was mainly driven by hopes of a better-than-expected earnings season and the UK’s fiscal policy reversal. In Germany, the Dax edged 0.2 per cent down, while France’s Cac 40 ended 0.4 per cent lower.

More than half of the sectors on the Stoxx 600 declined, with real estate and retailers leading the losses. The technology sector was boosted by strong results from ASML. ASML’s shares jumped 8.2 per cent after the chip-maker reported upbeat third-quarter sales and profit, and said it did not expect a large impact from US sanctions on China.

Handelsbanken jumped 6.2 per cent after the Swedish bank reported forecast-beating record earnings as interest income jumped in an environment of rising inflation and tighter monetary policy.

Nestlé dipped 1.3 per cent after the food company’s chief executive raised concerns about the “challenging economic environment” affecting consumers’ purchasing power. Royal Unibrew slid 14.6 per cent after the Danish brewery cut its full-year outlook.

US

Wall Street’s main indexes struggled to gain as weakness in shares of Abbott countered gains in Netflix, leaving investors muddled about the ongoing earnings momentum.

Abbott tumbled 8 per cent after reporting lower-than-expected growth in international medical device sales, hit by a strong dollar and supply challenges in China.

Netflix, on the other hand, jumped 13.9 per cent after it attracted 2.4 million new subscribers worldwide in the third quarter, more than double the consensus forecast, and guided for 4.5 million additions by year-end.

Additional reporting: Reuters