European stocks drop after souring of global economic mood

European stocks sank on Thursday, posting their worst session in two months with all sectors in the red as concerns about the resilience of the global economy sent investors fleeing to bonds.

Cyclical sectors such as mining stocks, automotive manufacturers and banks led the declines as the mood among investors soured. The widespread sell-off of shares followed a tumble in Asian markets.

DUBLIN

The Iseq recovered a portion of its lost ground at the close but still finished 2.4 per cent lower on a downbeat and risk-averse day for European equities.

Financial stocks were among the biggest fallers, with Bank of Ireland losing 5.4 per cent to finish at €4.28, while AIB was 3.5 per cent lower at €2.00.

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Building materials group CRH, the largest stock on the index, closed down 2.6 per cent at €41.50.

Packaging company Smurfit Kappa was also caught up in the downward momentum, shedding 3.3 per cent to €45.24, while Ryanair lost 1.65 per cent to finish at €16.13.

Paddy Power owner Flutter Entertainment fell 4.1 per cent to €149.75 on its Dublin listing, while food group Glanbia ended the session at €13.53, down 2.8 per cent.

Ires Reit was among the few risers, adding 1.9 per cent to €1.58, and Hibernia Reit managed a 0.8 per cent climb to just under €1.28.

LONDON

The FTSE 100 posted its biggest drop in three weeks, weighed down by heavyweight financials and miners. The blue-chip index ended down 1.7 per cent, while the mid-cap FTSE 250 was down 1.4 per cent.

Entain, the owner of the Ladbrokes and Coral brands, climbed 0.7 per cent and was the second biggest gainer on the index after it reported an 11 per cent rise in first-half net gaming revenue.

Homebuilder Persimmon slipped 4.8 per cent and was the third biggest decliner on the index, even after it reported higher half-year revenue and said it expected housing demand to remain robust.

British Airways and Aer Lingus owner IAG nudged up 0.3 per cent after UK transport secretary Grant Shapps said fully vaccinated people returning from "amber list" countries would no longer have to quarantine on arrival home from July 19th.

EUROPE

The pan-European Stoxx 600 index closed 1.7 per cent lower as investors sold off shares. In Frankfurt, the Dax fell 1.7 per cent, while the Cac 40 in Paris ended the session 2 per cent in the red. Italian and Spanish stocks fell by more than 2 per cent.

Euro zone banks slid nearly 3 per cent as government bond yields extended their falls.

Automakers fell about 2.3 per cent as BMW and Volkswagen slipped after the European Union issued hefty fines for an emissions cartel.

Dutch technology investor Prosus, which has a 29 per cent stake in Chinese tech giant Tencent, fell 4.1 per cent as the sector came under pressure globally.

German automotive lighting group Hella slipped 1.4 per cent after brakes maker Knorr-Bremse dropped plans to acquire a 60 per cent stake. Knorr-Bremse shares, meanwhile, jumped 7.3 per cent.

US

Wall Street’s main indexes fell as the spread of the Covid-19 Delta variant cast doubts over an economic recovery, while a rout in Chinese tech stocks spilled across markets.

The FAANG group of leading tech stocks, whose value rests heavily on future earnings, dropped between 0.7 per cent and 1.3 per cent, although Amazon bucked the trend and was in positive territory at about 6pm Irish time.

Chinese ride-hailing giant Didi Global, which has been at the centre of a sell-off after its app was taken down by Beijing, fell 5.6 per cent. Other US-listed Chinese stocks fell, tracking steep losses in China and Hong Kong, with ecommerce giant Alibaba falling 3.7 per cent and internet search engine Baidu down 3.9 per cent. – Additional reporting: Reuters