Fears over hawkish central bankers weigh on market sentiment

European shares hit one-week lows on Thursday after the US Federal Reserve hinted at continued interest rate hikes going forward, dampening hopes of a downshift in its aggressive fight against inflation.

In the US, Wall Street’s main indexes were also on track to extend losses for a fourth straight session as investors worried that the Fed’s interest rate rises would go on for longer than previously anticipated.

Dublin

The Iseq index fell 0.9 per cent as rises in the major bank shares were outweighed by fallers, such as Paddy Power-owner Flutter Entertainment. It dropped 5.5 per cent after Australia’s financial crime watchdog ordered an audit of Sportsbet, the country’s largest online betting house, operated by Flutter.

The big banks both rose as investors feared a more prolonged cycle of rising interest rates. Bank of Ireland was ahead by 2.7 per cent to €7.71, AIB was up by a similar percentage to €2.99.

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Several property stocks, which are sensitive to fears over rising interest rates, were down. Housebuilder Glenveagh Properties slipped 2.2 per cent to 97.5 cents, while Cairn Homes was down 1.8 per cent to 96 cent per share.

Glanbia fell almost 0.8 per cent to €11.34 after a trading update.

London

Britain’s exporter-heavy FTSE 100 share index closed higher as the pound extended falls after the Bank of England lifted interest rates but indicated rates would go up less in future than markets expect now. The FTSE 100 closed a volatile session 0.6 per cent higher after the BoE raised rates by 75 basis points, the most since 1989, but it also warned that Britain faced a long recession.

Sainsbury’s saw its shares up 7 per cent after revealing a drop in pretax profit of 8 per cent to £340 million in the six months to the end of September. Revenue rose by 4.4 per cent to £16.4 billion, the supermarket business said, adding that shoppers have increasingly opted for its own-brand products.

BT tumbled 8.9 per cent after the broadband and mobile operator increased its savings target by £500 million to help fund the rising cost of building its fibre network as it met forecasts in the first half. It will “inevitably” lead to job cuts, boss Philip Jansen said, and prices for customers are bound to go up. Alongside previous cost-cutting it means BT plans to tighten its belt by £4 billion by the end of the financial year starting in 2024.

Europe

The pan-European Stoxx 600 dropped 0.9 per cent, logging its worst single-day performance in four weeks with rate-sensitive technology and real-estate stocks shedding 2.3 per cent and 2.9 per cent respectively. While most major sectoral indexes slid, banks and insurers held their ground, rising 0.4 per cent and 0.2 per cent. European travel and leisure stocks slipped 1.6 per cent.

BMW lost 4.7 per cent as the German premium carmaker warned that rising inflation and interest rates would start to weigh on sales in coming months.

Soon-to-be-nationalised German gas importer Uniper slumped 5.3 per cent after a record €40 billion euro net loss, while BNP Paribas, the euro zone’s biggest lender, added 3.1 per cent as it posted a higher-than-expected net quarterly profit.

New York

Shares of megacap technology companies extended losses, with Apple Inc, Microsoft and Alphabet down between 1 per cent and 4 per cent as the 10-year US Treasury yield hit its highest level since October 25th.

Gains in industrials, including aircraft firm Boeing and heavy equipment-maker Caterpillar, limited declines on the Dow Jones.

Among companies reporting their quarterly results, Royal Caribbean Group rose 4.7% after mixed results, while Etsy Inc jumped 13.6 per cent to the top of the S&P 500 after beating quarterly revenue estimates.

Qualcomm Inc and Roku Inc tumbled 7.5 per cent and 4.1 per cent respectively after their holiday quarter forecasts fell below expectations.

(Additional reporting: Reuters/PA)