Markets dip as US Fed fails to soothe investor concerns over possible interest rate rise

European stocks fell for the second straight session on Thursday, with most major sectors handing back earlier gains made after less hawkish comments from the US Federal Reserve.

Investors were relieved after the Fed raised interest rates by 50 basis points on Wednesday, with chairman Jerome Powell explicitly ruling out a 75 basis point hike in a coming meeting, but the rally in European stocks faded just as Wall Street opened lower on Thursday.

Wall Street’s main index fell sharply in a broad-based sell-off as the Fed’s tone failed to ease investors’ expectations of bigger interest rate hikes this year to tame surging inflation.

DUBLIN

The Iseq index fell 1.6 per cent as stocks linked to consumer spending lead the declines. Flutter Entertainment, the owner of bookmaker Paddy Power, dropped by 3.5 per cent to close the session at €99,62 per share.

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Hotel group Dalata fell 1.6 per cent to €4.25, while Ryanair dropped by 2.3 per cent to €13.82 per share. Hammerson, the group behind the Dundrum Town Centre and many other retail centres in the UK, was down 3.3 per cent to £0.29.

With crude prices on the rise again, Tullow Oil closed the session ahead by 3.6 per cent to 65 cents per share.

LONDON

Britain's blue-chip index closed slightly higher, supported by strong earnings from energy major Shell and a slump in sterling after the Bank of England warned the UK economy was at risk of a recession.

The Ftse 100 index rose 0.1 per cent, while the domestically focused mid-cap index slipped 0.6 per cent.

Rate-sensitive bank and insurance stocks dropped about 0.6 per cent each as government bond yields fell. On the other hand, shares of dollar earners such as Diageo and British American Tobacco were supported as sterling tumbled more than 2 per cent against the dollar to its lowest since July 2020.

Shell jumped 3.1 per cent after the oil major posted a record quarterly profit, underpinned by higher oil and gas prices and a strong performance of its trading division.

Reach slumped 20.9 per cent after the news publisher flagged tepid advertiser demand, with the Ukraine conflict reducing the amount of content that brands want to be linked with.

Retailer Next reported a drop in online shopping as pandemic restrictions eased. Sales grew though, by over 21 per cent in the 13 weeks to the end of April, as customers headed back to the company's shops up and down the country. Compared to pre-Covid levels, sales are still 8 per cent below where they had been, the business revealed. Shares dipped 0.7 per cent.

EUROPE

The pan-European Stoxx 600 index closed 0.7 per cent lower, led by the travel and leisure, banking and insurance sectors. Dax, the main German index, ended up dropping 0.5 per cent while the Paris-based Cac fell 0.4 per cent.

Credit Suisse fell 2.8 per cent after it froze 10.4 billion Swiss francs of wealthy clients' assets in the first quarter under sanctions imposed in connection with Russia's invasion of Ukraine.

Airbus gained 6.3 per cent after the world's biggest plane maker reported a higher-than-expected quarterly profit and firmed up record plans for a 50 per cent hike in key narrowbody jet output.

NEW YORK

The Nasdaq dropped 5 per cent and the S&P 500 looked set to erase all of its gains from the previous session after Google parent Alphabet, Apple, Microsoft, Meta Platforms, Tesla and Amazon. com fell 4.8-7.3 per cent.

Shares of ecommerce companies from Etsy to Shopify tumbled after weaker-than-expected quarterly earnings and forecasts deepened concern that the pace of online shopping has slowed.

EBay gave a lacklustre sales and profit outlook for the current quarter, accelerating its decline from the peaks reached when shoppers were stuck at home during the pandemic.